annual report 2014/2015 - sadpmr annual report 2014-2015-min.pdf · sadpmr annual report 2014/2015...

ANNUAL REPORT

2014/20152014/2015

CONTENTSPart A: General Information ....................................................................................................................... 1

General Information ...................................................................................................................................... 2

List of Abbreviations/Acronyms .................................................................................................................... 3

Strategic Overview ....................................................................................................................................... 4

Programme Structure ................................................................................................................................... 5

Foreword by the Chairperson ...................................................................................................................... 6

Chief Executive Officer’s Overview ............................................................................................................... 7

Part B: Performance Information .............................................................................................................. 8

Statement of Responsibility for the Performance Information ....................................................................... 9

Auditor-General’s Report: Predetermined Objectives ................................................................................... 10

Performance Information for the 2014/2015 Financial Year ......................................................................... 11

Overview of the SADPMR Performance Information .................................................................................... 15

Programme Performance ............................................................................................................................. 16

Programme 1: Administration ....................................................................................................................... 16

Programme 2: Diamond Trade ..................................................................................................................... 18

Programme 3: Regulatory Compliance ......................................................................................................... 22

Part C: Human Resources ......................................................................................................................... 27

Part D: Corporate Governance .................................................................................................................. 33

Part E: Financial Information ..................................................................................................................... 42

1 SADPMR ANNUAL REPORT 2014/2015

GENERAL INFORMATION


PART A

SADPMR ANNUAL REPORT 2014/2015 2

1. GENERAL INFORMATION

Name South African Diamond and Precious Metals Regulator

Physical Address 251 Fox Street

Doornfontein

2028

Postal Address P.O. Box 16001

Doornfontein, 2028

E-mail Address [email protected]

Website www.sadpmr.co.za

Telephone Number +27 11 223 7000

Fax Number +27 11 334 8898


2. LIST OF ABBREVIATIONS/ACRONYMS

BBBEE Broad-Based Black Economic Empowerment

BBSEEC Broad Based Socio-Economic Empowerment Charter

CEO Chief Executive Officer

DEEC Diamond Exchange and Export Centre

DMR Department of Mineral Resources

GDV Government Diamond Valuator

HR Human Resources

ICT Information and Communication Technology

KPCS Kimberley Process Certification Scheme

MISS Minimum Information Security Standards

MPSS Minimum Physical Security Standards

MSP Master Systems Plan

NVS National Vetting Strategy

OHSA Occupational Health and Safety Act

PFMA Public Finance Management Act

PMDS Performance Management and Development System

PPC Parliamentary Portfolio Committee

PPPFA Preferential Procurement Policy Framework Act

SADPMR South African Diamond and Precious Metals Regulator

SDT State Diamond Trader

WSP Workplace Skills Plan

$ US Dollar, unless otherwise specified


3. STRATEGIC OVERVIEW

The South African Diamond and Precious Metals Regulator (SADPMR) ascribes to the following Vision, Mission, Values and Strategic Outcomes:

VISION

Regulating for business excellence, transformation and economic empowerment

MISSION

The SADPMR renders regulatory services by ensuring:

• Compliance with legislation

• Skills transfer

• Business development support

• Equitable access to resources

• Local beneficiation

VALUES

• Integrity

• Respect

• Time management

• Accuracy

• Consistency

STRATEGIC OUTCOME-ORIENTATED GOALS

• To ensure competitiveness, sustainable development and job creation in the diamond and precious metals industry.

• To ensure effective transformation of the diamond and precious metals sectors.

• To ensure equitable access to resources for local beneficiation.

• To ensure compliance with legislative requirements.

• To improve organisational capacity for maximum execution for excellence.

LEGISLATIVE MANDATES

The SADPMR is a Schedule 3A public entity in terms of the Public Finance Management Act, No 1 of 1999. It was established in terms of section 3 of the Diamond Act, No 56 of 1986, as amended.

The SADPMR’s mandate is to implement and enforce the provisions of the Diamond Act, No 56 of 1986, as amended; the Diamond Export Levy (Administration) Act, No 14 of 2007; the Diamond Export Levy Act, No 15 of 2007; and the Precious Metals Act, No 37 of 2005. These pieces of legislation are implemented in conjunction with other national legislation that directly and indirectly affect the role and mandate of the organisation.


DIAMOND EXCHANGE AND EXPORT CENTRE

GOVERNMENT DIAMOND VALUATORS

DIAMOND INSPECTORATE

PRECIOUS METALS AND BENEFICIATION

LICENSING

OFFICE OF THE CHIEF FINANCIAL OFFICER

HUMAN RESOURCES MANAGEMENT

INFORMATION COMMUNICATION

TECHNOLOGY

SECURITY RISK MANAGEMENT

KPCS AND COMMUNICATIONS

LEGAL SERVICES

4. PROGRAMME STRUCTURE

BOARD

CHIEF EXECUTIVE OFFICER

COMPANY SECRETARIAT

INTERNAL AUDIT

PROGRAMME 1ADMINISTRATION

PROGRAMME 2DIAMOND TRADE

PROGRAMME 3REGULATORY COMPLIANCE

TRANSFORMATION


MS N MKHUMANECHAIRPERSON

5. FOREWORD BY THE CHAIRPERSON

The past year has been one filled with challenges and it would be disingenuous to not concede to the fact that the precious metals and diamond industries

have “seen better days”. The industries have been one riddled with a significant decrease in production, job losses, closure of businesses and a decline in local beneficiation of diamonds and precious metals. Though the SADPMR has enforced compliance to the Mining Charter and policy on transformation, the industry is yet to achieve meaningful and sustainable transformation.

The SADPMR however, remains committed to the national policy on transformation and is empowered by the Diamond Act, 1986 (Act No 56 of 1986) as amended, to implement the National Mining Charter as stipulated in section 100 of the Minerals and Petroleum Resources Development Act, 2002 (Act No 28 of 2002). To ensure that this mandate is achieved, the Board of the Regulator established a specialised Transformation Team that is solely dedicated to ensuring that licence holders adhere to the undertakings they have made in their applications, regarding transformation. The team has achieved tremendous success by uncovering cases of fronting and reprimanding licence holders who have repudiated on the undertakings they have made. In this short time, the team has managed to enforce the empowerment and development of HDSA’s in various companies. I believe that this is a great initiative that has alleviated some of the challenges around transformation.

As a country with an endowment of minerals, illicit mining by the “zama zamas” will always be a contentious issue in South Africa, especially within the precious metals and diamond industries. Unfortunately, illicit mining and it’s activities have an adverse effect on the country’s GDP and global competitiveness. Illicit mining and trade has naturally infiltrated the downstream diamond and precious metals industries that the SADPMR is responsible for. The SADPMR has as a result, intensified and strengthened its relationships with enforcement agencies such as South African Revenue Services, the South African Police Services (SAPS) and its forensic laboratory, which is crucial in conducting

geometrical fingerprinting of various minerals, which assist with investigations. Relationships with these enforcement agencies have led to a successful of disruptive operations with the SADPMR and SAPS, investigations and arrests. The SADPMR is committed to strengthening these partnerships and cooperativeness between various State entities.

As mentioned above, there has been a decrease in the beneficiation of diamonds and precious metals. We cannot however ignore the strides made by those few who have succeeded, or the impact their success has had on related industries in South Africa. The local science, technology, logistics and textile industries that would ordinarily not be involved in the diamond and precious metals industries, have been exposed to it, through beneficiation.

Though we acknowledge that local beneficiation has decreased in the past year, we are proud of the other local industries that have grown and developed as a result of beneficiation

The SADPMR believes however that the decrease in beneficiation is a temporary one. It is our hope that the establishment of a State Bourse will address some of the challenges the industry is facing. The State Bourse will increase supply to the local beneficiation industry, it will promote the local beneficiation and jewellery manufacturing industries to the international market and give South Africa a competitive global advantage. The SAPDMR is committed to the finalisation and success of this project and will continue to support the Department of Mineral Resources in achieving this goal.

I would finally like to thank my fellow Board members for their support and dedication towards achieving the objectives of the SADPMR. I must also acknowledge the work that management is doing in ensuring that the operations of the SADPMR are run effectively and efficiently, it is through their hard work that the SADPMR has had an unqualified audit from the Auditor General.

MS N MKHUMANEChairperson


6. CHIEF EXECUTIVE OFFICER’S OVERVIEW

The South African Diamond and Precious Metals industries continued to realise a decline due to the overall global economic decline. During this year decisions were made to retrench a substantial number of employees in the platinum sector and some cutting and polishing factories scaled down by retrenching some employees.

Despite these challenges, the South African Diamond and Precious Metals Regulator continued to prioritise and promote local beneficiation. This was done by organising special rough diamond tenders for local beneficiators, as well as giving them first access to all tenders facilitated at the Diamond Exchange and Export Centre (DEEC).

Transformation of the industry remains a key priority of Government and the Regulator will continue to conduct verification inspections, in order to enforce the requirements of the Broad-Based Socio-Economic Empowerment Charter.

The outcome and opinion of the Auditor-General on the overall performance of the Regulator, is an unqualified one. To this, I would like to thank management and the entire staff of the Regulator.

In conclusion, I would like to dedicate my special thanks to all the board members of the Regulator and leadership provided by the Chairperson of the Board, Ms. Nombulelo Mkhumane. Their unwavering support and commitment to the priorities and objectives of government is highly appreciated.

As I will be retiring at the end of this year, I urge all who will continue serving the Regulator, to steadfastly and robustly pursue the already formulated Concept Document on the South African State Bourse to finality.

Mr L RapooChief Executive Officer

MR GL RAPOOCHIEF EXECUTIVE OFFICER


PERFORMANCE INFORMATIONPART B


1. STATEMENT OF RESPONSIBILITY

STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION FOR THE YEAR ENDED 31 MARCH 2015

The Chief Executive Officer is responsible for the preparation of the public entity’s performance information and for the judgements made in this information.

The Chief Executive Officer is responsible for establishing and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of performance information.

In my opinion, the performance information fairly reflects the operations of the public entity for the financial year ended 31 March 2015.

Mr L Rapoo Ms N MkhumaneChief Executive Officer Chairperson of the Board


2. AUDITOR-GENERAL’S REPORT:PREDETERMINED OBJECTIVES

The Auditor-General (AG) currently performs some audit procedures on the performance information for usefulness and reliability, compliance with laws and regulations and internal control, but an opinion is not expressed on the performance information.

A separate paragraph, ‘predetermined objectives’, is included in the current audit report on the financial statements. The paragraph comments on the work performed by the AG and the findings.

The AG’s report is currently included with the Annual Financial Statements. The findings of the work performed by the AG on performance information will be more useful and relevant if it is read in conjunction with the reporting of performance information in this Annual Report.


3. PERFORMANCE INFORMATION

PERFORMANCE INFORMATION FOR THE PERIOD UNDER REVIEW: 2014/2015 FINANCIAL YEAR

PROGRAMME 1: ADMINISTRATION

SUB-PROGRAMMES: HR, Communications, ICT, Legal Services, Finance, Security Risk Management

STRATEGIC OBJECTIVE KEY ACTIVITIES MEASURES BASELINE ANNUAL

TARGET ACTUAL PERFORMANCECONSTRAINTS

AND REMEDIES

REASONS FOR OVER-

ACHIEVEMENT

To enforce compliance with legislative requirements

Comply with legislation, policies and procedures

Reduction in a number of repeated findings

N/A 5 AchievedFive (5) repeat audit findings were addressed during the year under review.

Improve organisational capacity for maximum execution of excellence

Ensure the implementation of the Human Resource (HR) Plan

Number of Human Resource (HR) Plan pillars implemented

Approved HR Plan

5 pillars of the HR Plan implemented

AchievedFive pillars of the HR Plan were achieved • Achieved: Through

Workplace Skills Plan, thirty seven (37) employees were trained through external training/courses

• Appointed five (5) interns for the financial year

• Seven (7) misconduct cases were handled

• Three (3) posts created from abolished vacated posts and five (5) posts translated

• One(1) policy approved – Code of conducts

• Employer entered on multi-year agreement with NUM for annual cost living adjustment

• Fifty four (54) employees utilised the services of Employee Wellness Programme during the period under review.

• Advertised eighteen (18) posts (including invitation for internship programme) and appointed nine (9) employees, promoting two (2) employees.

• Performance Incentives for all employees was implemented

Implement the approved SADPMR Communication Policy

Number of engagements with internal and external stakeholders

12 12 Achieved Twelve (12) engagements conducted



TARGET ACTUAL PERFORMANCECONSTRAINTS

AND REMEDIES

REASONS FOR OVER-

ACHIEVEMENT

Improve organisational capacity for maximum execution of excellence (continued)

Implement the Master System Plan (MSP)

Number of MSP programmes implemented

2 2 programmes implemented

AchievedTwo (2) programmes implemented:• DR Testing Register• Web Admin SLA bug

fixing signed offImplement Minimum Information Security Standards (MISS)

Number of MISS programmes implemented

2 2 Achieved Two MISS programmes implemented:• Emergency Evacuation

Drill evaluation checklist • Submission of Vetting

Documents Provide legal support to the Regulator

% of matters referred for legal advice and opinions addressed

100% 100% Achieved 100% of matters referred addressed

Number of legislative amendments submitted to the DMR

N/A 2 Not achieved 1 amendment submitted to DMR

Awaiting the passing into law of the MPRDA Bill

% of contracts and SLAs vetted

100% 100% Achieved 100% of contracts and SLAs vetted


PROGRAMME 2: DIAMOND TRADE

SUB-PROGRAMMES: Diamond Exchange and Export Centre (DEEC), Government Diamond Valuator (GDV) and Kimberley Process Certification Scheme (KPCS)


TARGETACTUAL

PERFORMANCECONSTRAINTS AND

REMEDIES

REASONS FOR OVER-

ACHIEVEMENT

To improve competitiveness, sustainable development and job creation in the diamond and precious metals industries

Facilitate skills development initiatives for the industries

Number of skills initiatives facilitated for the industries

3 2 Achieved 2 skills initiatives facilitated

To improve equitable access to resources for local beneficiation

Increase access to diamonds for local beneficiation

Number of beneficiators accessing the DEEC

287 130 Achieved176 beneficiators accessed the DEEC

Special tenders were facilitated specifically for Diamond Beneficators.Priority to access the DEEC was also given to Beneficiators

Number of polished diamond tenders facilitated

5 4 Not achieved 1 polished diamond tenders facilitated

The DEEC received 10 parcels that were placed on tender but only one was completed by year- end and the other 9 are still in progress

Number of clients accessing the DEEC

3 546 1 400 Achieved3 522 clients accessed the DEEC.

The DEEC had more clients due to the number of tender activities included in the financial year


Conduct diamond valuation services

% of valuations conducted regarding the fair market value lodged

100% of diamonds offered/

presented

100% of diamonds offered/

presented

Achieved 100% (521) of diamond valuations conducted on diamonds offered/ presented for valuation

Improve diamond valuation services

% of disputes on valuations regarding the fair market value lodged

0.20% 2% Achieved No disputes were lodged

Oversee the administration of KPCS

% compliance to KPCS requirements

100% compliance to KPCS to minimum

requirements checklist

100% compliance to KPCS to minimum

requirements

Achieved100% compliance to KPCS minimum requirements• 4 quarterly report

submitted. • Review visit: Ivory

Cost • Attended plenary

and intercession meeting.

• Annual Report 2014

• KPC certificates issued (JHB 1321, Kimberly 11)


PROGRAMME 3: REGULATORY COMPLIANCE

SUB-PROGRAMMES: Licensing, Diamond Inspectorate, Precious Metals and Beneficiation


TARGETACTUAL

PERFORMANCECONSTRAINTS AND REMEDIES

REASONS FOR OVER-ACHIEVEMENT


Issue licenses to enable diamond and precious metals trade

Number of new licences issued within 60 working days based on completeness of the applications

650 250 Not Achieved136 Licenses issued

271 licenses were issued within the financial year, but only 136 were issued within 60 working days.

Assist new entrepreneurs in the diamond and precious metals industries

Number of new entrepreneurs assisted

6 5 Achieved 7 New entrepreneurs assisted

Received more requests from entrepreneurs to assist them.


Conduct compliance inspections audits on licensees

Number of BBSEEC compliance inspections/ audits conducted

258 250 Achieved272 BBSEEC compliance inspections/audits conducted

Performed more audits to save costs in view of cost containment measure

Conduct inspection services within the diamond and precious metals sectors

Number of inspections conducted

1 400 1 300 Achieved1 444 (766 Precious metal inspections & 678 Diamond inspections)

There was an increase in the number of inspections conducted for trading houses


Oversee the provision for issuing of beneficiation licences

Number of Beneficiation Licenses issued

112 50 Achieved63 beneficiation licenses issued

Received more new beneficiation applications than anticipated

To transform the diamonds and precious metals sectors

Promote participation of HDSAs in the diamond and precious metals industries

Number of HDSAs issued with beneficiation licences

39 50 Not Achieved15 HDSAs issued with Beneficiation licenses.

Received less number of new applications than anticipated. Continuously holding workshops encourage HDSA to apply for Beneficiation

Decrease the number of inactive businesses

Number of inactive businesses assisted

Establish baseline

20 Achieved22 Inactive businesses assisted

More people were invited to attended the workshop

Facilitate skills development initiatives for the industries

Number of skills initiatives facilitated for diamonds and precious metals industries

2 2 Achieved3 Skills initiatives facilitated.(1 Precious Metals & Beneficiation + 2 Licensing Division)

Received more skills initiatives than anticipated


OVERVIEW OF THE SADPMR’S PERFORMANCE


The SADPMR’s staff complement is 115, with black females constituting a higher percentage at 59%. In addition, five interns were recruited into various divisions.

The SADPMR continues to make strides in developing its employees’ skills levels. In addition to existing bursaries, 12 new ones in various fields of study were awarded to employees. Employees attended short courses to address the gaps identified in Personal Development Plans (PDPs) and for general skills development.

The Finance Division has achieved all targets set in the strategic plan of the SADPMR and compliance checklists to this effect were sent to National Treasury on a quarterly basis. All issues raised by the Auditor-General as matters of emphasis, as well as other value-adding matters, were followed up and addressed properly. Spending was prudently monitored to ensure alignment with the approved budget.

The implementation of the web-based system has integrated processes between business units in the SADPMR, which led to improved collection of revenue.


The Government Diamond Valuator successfully managed to determine a fair market value of the 10% offer by diamond producers, pursuant to Diamond Act No 56, Section 59B. As a result there were no disputes declared over prices during the year under review.

South Africa’s rough diamond export increased in 2014 by 21%, relative to 2013. The Diamond Exchange and Export Centre (DEEC) recorded a decrease in polished diamond imports compared to the previous financial year. Some of these polished diamonds were imported into South Africa for consultation and certification at local laboratories. Synthetic diamonds imported to South Africa have been closely monitored in this current financial year and a significant increase has been recorded.

The number of clients accessing the DEEC has grown three-fold compared to the previous year. Diamond beneficiators were given preferential access to view goods at the DEEC.


There was an increase in precious metals licences issued in the 2014/2015 financial year, relative to the previous financial year. This is attributable to jeweller’s permit renewals.

There was more focus on inspections conducted at diamond trading houses to prevent assistance to licensees by non-licensees in the viewing and purchasing of diamonds, pursuant to section 20A of the Diamond Act, 1986. This made it easier for licensees to gain increased access to diamond parcels.

During the year under review, the number of precious metals inspections increased by 26% relative to the previous year. The impact of the increase in the number of inspections has improved compliance with the Precious Metals Act, 2005.


PROGRAMME PERFORMANCE


SUB-PROGRAMMES: Finance, Communications, ICT, Legal Services, Internal Audit, Security Risk Management, HR

PURPOSE OF THE PROGRAMME: Provision of administration

SUB-PROGRAMME: Finance

The main function of the Finance Division is to provide support to the SADPMR by ensuring that the budget is aligned to the strategic objectives of the entity and that the revenue, expenditure, assets and liabilities of the entity are managed efficiently, effectively and in compliance with the Public Finance Management Act. The Finance Division is also responsible for the timely submission of the Annual Financial Statements and to report any matter to the National Treasury as may be required.

During the year under review, the Finance Division executed all key activities aimed at achieving strategic objectives for the year. Assets were reassessed and accounted for in accordance with Generally Recognised Accounting Practice (GRAP). The Assets Management Policy was revised to align it with the required standards. Issues raised by the Auditor-General as matters of emphasis in the 2013/2014 financial year were followed up and addressed.

National Treasury’s directives relating to cost containment measures were adhered to. Expenditure items where costs could be reduced were identified. The SADPMR will continue to identify and reduce non-essential expenditure annually.

The new license and service fees were gazetted in October 2014, allowing for the augmentation of the funds of the SADPMR.

Due to the implementation of effective procurement processes and controls in place, the SADPMR exercised discipline in managing its financial matters, thus preventing fruitless and wasteful expenditure and irregular expenditure. The SADPMR is committed to promoting the participation of eligible South Africans in government procurement as enshrined in the Constitution.

SUB-PROGRAMME: Information Communication Technology (ICT)

In the year under review, the Disaster Recovery Site was implemented and tested, which was a milestone in the ICT Strategic Plan. The identified business application data is replicating from the primary site (at the SADPMR) to the Disaster Recovery Site, ensuring that data will be accessible should a disaster occur at the primary site.

SUB-PROGRAMME: Security Risk Management

In the year under review, the SADPMR implemented Minimum Information Security Standards (MISS), Minimum Physical Security Standards (MPSS) and a National Vetting Strategy (NVS). Two programmes: Personnel Security (Vetting); and a Contingency Plan (bi-annual evacuation practices), were implemented.

Vetting forms were submitted to the State Security Agency, of which some related to officials who had not been vetted but were responsible for Supply Chain Management (SCM) and the Bid Adjudication Committee (BAC).


SUB-PROGRAMME: Legal Services

Legal Services ensures the provision of legal support and advisory services to and on behalf of the SADPMR.

During the period under review, the SADPMR was involved in two noteworthy cases – the first dealt with the constitutionality of the two Diamonds Amendment Acts (Acts No 29 and 30 of 2005); and the second was a labour relations matter. Both cases are still pending.

SUB-PROGRAMME: Human Resources Management (HRM)

The HRM provides services relating to organisational development; recruitment and selection; facilitating performance evaluation of employees through the Performance Management and Development System (PMDS); managing service benefits; Employee Wellness Programme (EWP); labour relations management; and building human resources capacity through training and development interventions.

The main priority in the year under review was the implementation of an approved Integrated Human Resources Plan. The Employee Wellness Programme continues to offer health promotion programmes for SADPMR employees. During the period under review, considerable effort was made to attract, recruit and retain employees with critical skills.



SUB-PROGRAMME: Diamond Exchange and Export Centre (DEEC)

The Diamond Exchange and Export Centre is responsible for facilitating diamond tenders and processing diamond imports and exports.

The DEEC focused on providing local diamond beneficiators with priority access to and viewing of diamonds during tenders. In addition, special tenders were facilitated specifically for local diamond beneficiators, which led to an increase in diamond parcels purchased.

The Republic of South Africa led a Kimberley Process Review Visit – a peer review mechanism to evaluate member countries on their compliance to the Kimberley Process minimum requirements – to the People’s Republic of China.

South Africa became the first Chair of the new Committee on Participation and Chairmanship in the year 2014. This committee resulted from the merging of the Participation and Selection committees.

Rough Diamond Trade at the DEEC

The table below indicates the rough diamond tender activities facilitated at the DEEC during the 2014/2015 financial year. The DEEC received 4 163 964 carats valued at US$ 969 207 545. Compared to the previous year, there was a decrease of 1 378 401 carats offered to local diamond beneficiators.

Table 1: Rough diamonds offered for sale by diamond producers, dealers and beneficiators - 2014/2015 vs 2013/14

YEARROUGH DIAMONDS RECEIVED SOLD AND QUALIFIED FOR EXPORT WITHDRAWN

CARATS VALUE ($) CARATS VALUE ($) CARATS VALUE ($)

2014/15 4 163 964 969 207 545 4 163 964 973 448 633 0 0

2013/14 5 542 366 1 092 687 802 5 541 180 1 084 333 080 1 186 37 682

Rough diamond exports

South Africa exported approximately 10.4 million carats, valued at $1.7 billion, during the 2014 calendar year. This represented an increase from 8.6 million carats, which were valued at approximately at $1.5 billion, compared to the 2013 calendar year.

Exports to Botswana increased significantly, from approximately 3.7 million carats in 2013 to 5 million carats in 2014, which represents a 48% trade with South Africa, followed by the European Union, which received 29% in rough diamond exports. The balance of 23% is comprised of export trade from other KP member countries.

Figure 1: 2014 Rough diamond exports (carats)

Israel: 3%United Arab Emirates: 17% Botswana: 48%

Other: 3%

European Union: 29%

Other: Thailand, Cote D’Ivoire, Russia, USA, UAE, Switzerland, Namibia, India, China and Canada


Table 2: Rough diamond exports - 2014 vs 2013

PARTICIPANT2014 2013

CARATS VALUE ($) CARATS VALUE ($)

Botswana 5 000 716 662 127 876 3 698 833 481 758 531

Canada 365 64 007 17 1 000

China PR 20 921 7 720 856 63 368 10 852 448

Cote D’Ivoire 218 95 469 0 0

European Union 2 954 497 446 550 568 2 354 130 410 757 348

India 152 205 17 974 682 79 142 33 152 474

Israel 330 385 224 032 229 322 779 187 477 803

Namibia 603 107 249 0 0

Switzerland 102 899 99 369 164 98 654 79 115 96

Thailand 3 409 1 991 996 7 098 1 725 731

United Arab Emirates 1 798 364 208 116 110 1 910 430 256 957 277

United State of America 31 162 39 902 325 31 630 79 798 215

TOTAL 10 395 744 1 708 052 531 8 566 081.00 1 541 596 787

Rough diamond importsSouth Africa imported 682 068 carats of rough diamonds valued at approximately $ 511 million during the 2014 calendar year. This reflects a decrease from $ 864 million compared to the previous calendar year. Thirty two percent (32%) of imported carats were traded with Botswana, followed by 23% from the United Arab Emirates. The balance of 45 % was comprised of import trade from other KP member countries.

Table 3: Rough diamond imports - 2014 vs 2013

PARTICIPANT2014 2013

CARATS VALUE ($) CARATS VALUE ($)

Botswana 217 427 268 998 806 198 531 275 924 32Canada 352 62 180 80 1 724China, PR 108 539 286 3 633 1 911 747Cote D’Ivoire 218 95 468 0 0Congo, DR 19 597 337 846 12 230 441 466European Union 75 189 41 218 166 129 929 61 848 235Guinea 0 0 80 28 000India 3 516 1 404 298 28 799 2 683 089Israel 76 362 41 348 818 151 298 119 860 156Liberia 0 0 2 072 669 867Namibia 357 131 382 535 825 594Russian Federation 990 1 306 425 21 58 203.Sierra Leone 0 0 7 7 250Switzerland 86 037 100 709 416 53 865 30 770 696Thailand 78 20 500 0 0United Arab Emirates 155 581 29 228 715 138 278 45 306 492United State of America 2 133 24 718 342 2 643 28 972 886Zimbabwe 44 125 1 500 262 142 082 174 539 824

TOTAL 682 070 511 619 910 864 084 743 849 548


Polished diamond exports

During the period under review, South Africa exported a total of 160 599 carats of polished diamonds, valued at approximately $933 million. There was a decrease of approximately 19 000 carats of diamond exports received and declared during this period, compared to the previous financial year.

Table 4: Polished diamond exports - 2014/2015 vs 2013/2014

2014/2015 2013/2014

CARATS VALUE ($) RAND VALUE CARATS VALUE

($) RAND VALUE

TOTAL 160 599 933 888 697 10 435 683 981 180 096 1 034 670 337 10 587 527 307

Polished diamond imports

During the period under review, the DEEC received and cleared a total of 173 990 carats of polished diamond imports, valued at approximately $476 million. There was a decrease of approximately 25 000 carats of diamonds declared during this period, compared to the previous financial year.

Table 5: Polished diamond imports - 2014/2015 vs 2013/2014

2014/2015 2013/2014


($) RAND VALUE

TOTAL 173 990 475 746 778 5 336 434 948 199 216 595 310 209 6 133 928 793

Synthetic diamond powder imports

The DEEC received and cleared 125 576 820 carats of synthetic diamond powder, valued at approximately US $10 million. The synthetic diamond powder was imported for industrial application.

Table 6: Synthetic diamond imports - 2014/2015 vs 2013/2014

2014/2015 2013/2014


($) RAND VALUE

TOTAL 125 576 820 10 999 169 122 135 543 113 021 654 10 014 199 102 622 875

Figure 2: 2014 Rough diamond imports

Other: 1%

DRC: 3%

United Arab Emirates: 23%

Zimbabwe: 6%

European Union : 11%

Botswana: 32%

Israel: 11%Switzerland: 13%

Other: Cote D’Ivoire, USA, Thailand, Switzerland, Namibia, India, China and Canada.


SUB-PROGRAMME: Kimberley Process Certification Scheme (KPCS)

The SADPMR oversees the administration and implementation of the KPCS and Kimberley Process (KP) participation, by ensuring compliance with KPCS requirements and other relevant legislation.

Issuing of KPCS certificates: During the calendar year, 1 406 KP certificates for exports were issued to 22 KP participants, while 289 KP certificates were received from KP participants.

Submission of quarterly reports (statistics): Four quarterly statistical reports were timeously submitted to the KP Working Group on Statistics.

Submission of 2014 Annual Report: The South African Kimberley Process 2014 Annual Report was submitted on time and in line with requirements.

2014 Highlights

The Committee on Participation and Chairmanship (CPC) was created in 2013 through the merging of the Participation and Selection committees. The Republic of South Africa served as Chair of the new Committee on Participation and Chairmanship for the year 2014.

On 29 April 2014, the United Nations Security Council resolved to lift the sanctions that were imposed in 2005 on Cote D’ Ivoire’s rough diamond trade and the KPCS endorsed their trade in rough diamonds.

KP could not reach consensus on which participant should serve as the Vice Chair for 2015. A decision was taken to refer the issue to the KP Chair for further consultation, as stipulated in the New Delhi Administration Decision of 2008.

As part of the peer review mechanism, South Africa led the Review Visit to China during the calendar year to assess its compliance with the minimum requirements of the Kimberley Process.

SUB-PROGRAMME: Government Diamond Valuator (GDV)

The GDV provides valuation services related to diamond exports, imports and the diamond production offered to the State Diamond Trader by diamond producers, in terms of section 59B of the Diamond Act, 1986. It ensures that diamonds are traded at fair market value and provides technical assistance to the South African Police Services.

GDV verification of diamonds offered to State Diamond Trader in terms of Section 59B of the Diamonds Act, 1986

Diamond production offered to the State Diamond Trader in terms of Section 59B of the Diamonds Act, 1986, declined by 5.41% from the previous financial year (2013/2014).

Table 7: Producer summary (in carats) of all unpolished diamonds verified by the GDV in terms of Section 59B - 2014/2015 vs 2013/2014

2014/2015 2013/2014

Production carats presented to the SDT 7 885 167 8 336 934

Carats purchased by the SDT 46 485 259 195


Diamond valuation services rendered to South African Police Services (SAPS)

The GDV renders a service to the South African Police Service (SAPS) for all objects confiscated, for the purpose of an expert opinion.

During the 2014/2015 financial year a total of 3 062 objects were presented to the GDV for valuation, compared to 1062 objects during the 2013/2014 financial year. It should also be noted that the amount of diamond content confiscated increased to 2919.02 carats in the year 2014/2015, compared to 168.39 carats confiscated in 2013/2014.

Table 8: Objects confiscated by the South African Police Services (SAPS)

PROVINCE 2014/15 EXHIBITS TOTALS

2013/14EXHIBITS TOTALS

DIAMONDS NON DIAMONDS CARATS VALUE

(ZAR) DIAMONDS NON DIAMONDS CARATS VALUE

(ZAR)

Gauteng 1158 6 1152 10 5 486 300 44 256 18 154 827Limpopo 2 1 1 2 567 0 0 0 0 0Free state 636 416 220 103 347 396 180 107 73 33 21 315Northern Cape 937 556 381 2 707 1 715 079 354 137 217 56 118 894Eastern Cape 0 0 0 0 0 4 0 4 0 0North West 130 6 124 36 104 631 168 42 126 50 107 435Mpumalanga 0 0 0 0 0 0 0 0 0 0KwaZulu- Natal 0 0 0 0 0 3 2 1 1 892Western Cape 199 40 159 61 305 763 51 9 42 10 10 481

TOTAL 3 062 1 025 2 037 2 919 2 478 922 1 060 341 719 168 413 845


SUB-PROGRAMMES: Licensing, Diamond Inspectorate, Precious Metals and Beneficiation

PURPOSE OF THE PROGRAMME: To regulate the diamond and precious metals industries

SUB-PROGRAMME: Licensing Division

The Licensing Division is responsible for processing and issuing all licences and permits provided for in the Diamonds Act, 1986, and in the Precious Metals Act, 2005.

Highlights

There was an increase in precious metals licences issued in the 2014/2015 financial year relative to the previous financial year, attributable to the renewal of jeweller’s permits.

A total of 803 diamond and precious metals licenses, permits and certificates were issued. Of these, 527 were diamond licenses and 276 precious metals licenses. This compares to 735 overall diamond and precious metals licenses issued in the previous year.

There was a decrease in diamond beneficiation and diamond dealer license applications received in 2014/2015 compared to the previous financial year. On the contrary, there was an increase in the number of Authorised Representative certificate applications received and issued.


Table 9: Diamond license applications received and licences issued

LICENSE TYPE2014/2015 2013/2014

APPLICATION RECEIVED LICENSE ISSUED APPLICATION

RECEIVED LICENSE ISSUED

Diamond Beneficiation 28 40 115 112Diamond Dealer 169 178 282 265Diamond Trading House 11 1 6 6Diamond Research 1 1 3 1Temporary Buyers’ Permit 0 0 0 0Diamond Certificate 0 0 2 1Authorised Representative Certificate 278 274 110 70Diamond Permit 31 33 42 35

TOTAL 518 527 560 490

Of 285 jeweller’s permit applications, received 230 were issued, compared to the previous year (45 applications received; 40 permits issued). There was no significant variance in other types of licenses and permits issued.

Table 10: Precious metals applications received and licences issued

LICENSE TYPE2014/2015 2013/2014

APPLICATION RECEIVED LICENSE ISSUED APPLICATION

RECEIVED LICENSE ISSUED

Precious Metals Refining 5 5 10 7Precious Metals Beneficiation 4 3 3 3Jeweller’s Permit 285 230 45 40Special Permit 10 7 12 12Permit to Import 10 14 14 8Export Approval 13 14 16 11Precious Metal Certificate 2 3 3 3

TOTAL 329 276 103 84

The table below reflects ownership by historically-disadvantaged South Africans (HDSA) in terms of the Broad-Based Socio-Economic Empowerment Charter (BBSEEC), during the period under review, and based on diamond dealer and beneficiation, precious metals, jeweller’s permits, precious metals beneficiation and refining licenses data.

Table 11: Diamond and precious metals licenses issued based on HDSA and non-HDSA ownership for 2014/2015

LICENSES ISSUED AND % OWNERSHIP

NUMBER OF LICENSES/

PERMIT

100% HDSA OWNERSHIP

90%-50% HDSA OWNERSHIP

≥26% HDSA OWNERSHIP NON-HDSA

MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE

Diamond Dealers 133 59 14 6 1 6 5 20 7Diamond Beneficiation 15 9 1 0 0 3 1 5 0Jeweller’s Permit 45 3 2 1 0 1 0 20 19Precious Metals Beneficiation 5 0 0 0 0 3 1 3 0Precious Metals Refining 4 1 0 0 0 1 0 2 0

TOTAL 202 72 17 7 1 14 7 50 26

Note: Historically Disadvantaged South Africans (HDSA) are South Africans of the Black, Coloured, Indian and Chinese (resident or born in South Africa before 1994) communities


SUB-PROGRAMME: Diamond Inspectorate

The Diamond Inspectorate is responsible for ensuring compliance with the Diamond Act, 1986, as amended, by conducting inspections relating to diamond licenses and monitoring trade transactions through prescribed registers.

Highlights

Inspections were conducted at diamond trading houses to prevent assistance to licensees by non-licensees in the viewing and purchasing of diamonds, pursuant to section 20A of the Diamond Act, 1986.

There was an observed increase in the submission of registers, mainly attributable to follow-up inspections.

Table 12: Breakdown of inspections conducted by licence/permit type

LICENCE/PERMIT TYPE NUMBER OF INSPECTIONS 2014/15 NUMBER OF INSPECTIONS 2013/14

NEW PREMISES INSPECTIONS

FOLLOW-UP INSPECTIONS



Dealing License 176 190 206 254Beneficiation License 25 34 50 78Trading House License 1 79 1 50Research License 0 2 3 1Producer Permit 60 124 44 50Import/Export Comfort Letters 0 47 0 56

TOTALS 262 476 304 489

The table above shows that a total of 738 inspections were conducted during the period under review in 2014/2015. This number includes 60 new producer permit registrations processed. Of these inspections, 202 related to new diamond license applications while 476 were follow-up inspections on existing licenses.

The bulk of these 738 inspections (62%) related to follow-ups on existing licences to ensure that licensees complied with the terms and conditions of their respective licences. Focus in this period was more on trading house follow-up inspections, with a 58% increase compared to the previous year. Follow-up on diamond producers was also key to ensuring compliance with J-register purchasing and monthly submissions to the SADPMR.


SUB-PROGRAMME: Precious Metals and Beneficiation

The Precious Metals and Beneficiation sub-programme of the Regulatory Compliance Programme has two main functions:

• Precious metals inspections: This function entails ensuring compliance with the Precious Metals Act, and involves:

a. Conducting inspections relating to precious metals licences and applications for such licences, and

b. Monitoring trade transactions through prescribed registers and information submission forms.

• Beneficiation: The function involves monitoring and promoting the beneficiation of precious metals and diamonds in South Africa.

Precious metals inspections

During the year under review, inspections increased by 26%. The impact of the increase in the number of inspections improved compliance to the Precious Metals Act, 2005.

A total of 766 inspections were conducted, of which 144 were related to new precious metal licence/permit applications, while the balance of 622 were follow-up inspections conducted on the premises of existing licence/permit holders. The number of inspections conducted represented a 26% increase compared with the previous year (607 inspections, of which 122 were for new applications, and 485 were related to existing licences/permits). The increase was due mainly to the increase in the number of follow-up inspections.

Most inspections were related to applications for jeweller’s permits (118 – mainly renewals) and existing jeweller’s permits (524), followed by inspections related to refining licences and beneficiation licences. Jeweller’s permit follow-up inspections dominate inspections as these are the principal permits issued by far. Jewellery manufacturing is the main activity relating to precious metals, in terms of the number of participants in the industry in South Africa.

Through inspecting premises, transgressions were identified and dealt with in accordance with the provisions of the Precious Metals Act, 2005. Furthermore, follow-up inspections assisted in educating new licensees on register completion, thus ensuring registers were completed and submitted timeously.

Table 13: Breakdown of inspections done by licence/permit type

LICENCE/PERMIT TYPE NUMBER OF INSPECTIONS 2014/2015 NUMBER OF INSPECTIONS 2013/2014





Refining Licence 11 58 16 47Beneficiation Licence 7 39 8 46Jeweller's Permit 118 524 83 390Special Permit 8 1 15 2

TOTALS 144 622 122 485

Register of transactions

Every holder of a precious metals licence or permit must keep a true and correct register in the prescribed format and for the prescribed period, of all unwrought or semi-fabricated precious metals deposited, received, dispatched or otherwise disposed of by him or her. Such registers of transactions must be submitted to the SADPMR periodically (quarterly, bi-annually or annually, as the case may be).

Although register submissions remained a challenge because of the different submission periods for licences and permits, there was an improvement of 6% in register submission (from about 74% to 80%) compared to the previous corresponding period. Non-submission of registers was followed up and warning letters were sent to defaulters.


Beneficiation

Diamond beneficiation

During the period under review, diamond beneficiators purchased a little over 880 000 carats of rough diamonds, of which about 224 000 carats (26% of purchases in carat terms) were cut and polished. These figures were lower relative to the 2013/2014 financial year and the decrease has been attributed to tough market conditions (high rough diamond prices and low polished diamond prices; lower demand in the market and stricter lending criteria of banks) during the year. Additionally, some 40 diamond cutters at one diamond beneficiation company were retrenched in the second half of the year.

Table 14: Diamond beneficiation: 2014/2015 vs 2013/2014

YEAR DIAMOND PURCHASES BY BENEFICIATORS (CARATS)

DIAMONDS BENEFICIATED(CARATS)

2014/15 880 000 224 0002013/14 850 000 244 000

Precious metals beneficiation

The SADPMR estimates South Africa’s total gold fabrication (beneficiation) in the financial year 2014/2015 at some 24 tons, significantly down from the 29 tons fabricated in the financial year 2013/2014. The decrease is attributed to lower coin fabrication. Nevertheless, most of the gold fabricated in 2014/2015 still went into the minting of coins and minted bars (21 tons). This compares with the 26 tons consumed by the manufacture of coins and minted bars in the financial year 2013/2014. The balance of gold fabrications is accounted for by jewellery manufacture/remodelling and industrial and decorative applications.

Platinum-group metal (PGM) fabrication is dominated by the fabrication of catalytic converters. The SADPMR estimates PGM fabrication at some 28 tons in 2014/2015, notably down compared from that in 2013/2014 (30 tons). This was due to lower demand, particularly in Europe.

Table 15: Precious metals fabrication, 2013/2014 and 2014/2015

YEAR GOLD FABRICATION (TONS) PGM FABRICATION (TONS)

2014/2015 29 302013/2014 24E 28E

E Estimate


HUMAN RESOURCES PART C



The purpose of Human Resources Management (HRM) is to enable the organisation to deliver on its mandate, by providing strategic human resources management and administration to the SADPMR. The main priority was the implementation of an approved Integrated Human Resources Plan.

The HRM provides services relating to organisational development; recruitment and selection; facilitating performance evaluation of employees via a Performance Management and Development System (PMDS); managing service benefits; an Employee Wellness Programme (EWP); labour relations management; and to building human resources capacity via training and development interventions.

The HR Division played a pivotal role in creating a harmonious working environment and improving working relationships between staff members, with the ultimate goal to make SADPMR an employer of choice. The EWP continues to facilitate the implementation of health promotion programmes and the rendering of psycho-social support to all SADPMR employees and their family members. During the period under review, a considerable effort was made to retain, attract and recruit employees with critical skills, in order to deliver on the organisation’s mandate.

HUMAN RESOURCES STATISTICSPERSONNEL COST BY SALARY BAND

The table below indicates the annual salary costs of all employees, per occupational level.

Table 1: Personnel cost by salary band

LEVEL PERSONNEL EXPENDITURE

% OF PERSONNEL EXPENDITURE TO TOTAL

PERSONNEL COST NO. OF EMPLOYEES AVERAGE PERSONNEL

COST PER EMPLOYEE

Top Management 7 239 060 13.6 5 1 447 812

Senior Management 8 178 273 15.3 8 1 022 284

Professional Qualified 18 054 946 33.8 29 622 584

Skilled 14 814 210 27.7 47 315 196

Semi-Skilled 4 031 224 7.5 19 212 170

Unskilled 1 106 618 2.1 7 158 088

TOTAL 53 424 331 100 115 3 778 134

PERFORMANCE REWARDS

In order to encourage good performance, the SADPMR granted a number of performance rewards during the period under review. The information is presented in Table 2 below, in terms of the number of staff and occupational categories.

Table 2: Performance rewards

PROGRAMME PERFORMANCE REWARDS PERSONNEL EXPENDITURE % OF PERFORMANCE REWARDS TO TOTAL PERSONNEL COST

Executive Management 5 422 644 6

Senior Management 8 385 526 5

Professional Qualified 32 682 946 4

Skilled 43 491 472 3

Semi-Skilled 17 109 221 3

Unskilled 7 26 792 2


INTERNAL STAFF BURSARIES During the period under review, 24 employees were awarded internal bursaries in different fields of study. The table below provides a summary of bursaries and expenditure in the respective divisions of the organisation.

Table 3: Internal bursaries

DIRE DIRECTORATE/BUSINESS UNIT

PERSONNEL EXPENDITURE

TRAINING EXPENDITURE

TRAINING EXPENDITURE AS A % OF PERSONNEL

COSTS

NO. OF EMPLOYEES TRAINED

AVERAGE TRAINING COST PER EMPLOYEE

Licensing 3 186 474 28 700 0.9 5 5 740

Finance 8 955 156 68 502 0.8 4 17 126

Information and Communication Technology

3 715 733 5 490 0.1 1 5 490

Office of the CEO 6 595 508 37 255 0.6 3 12 418

Precious Metals and Beneficiation 5 849 028 30 930 0.5 5 6 186

Security Risk Management 4 155 551 27 771 0.7 3 9 257

Diamond Export Exchange Centre (DEEC) 6 500 494 8485 0.1 2 4 243

Legal Services 2 337 622 5 000 0.2 1 5 000

TOTAL 41 295 566 212 133 24 65 460

INTERNSHIP PROGRAMMEDuring the year under review five interns were appointed. The table below summarises the total number of interns in terms of gender and race.

Table 4: Internship programme

MALE FEMALE FOREIGN NATIONAL TOTAL

A C I W A C I W MALE FEMALE

Internship Programme 3 0 0 0 2 0 0 0 0 0 5

* African = A, Coloured = C, Indian = I, White = W

EMPLOYMENT AND VACANCIES The table below indicates the number of approved funded posts in the organisation, the number of employees and the vacancy rate. This information is presented in terms of occupational levels during the period under review.

Table 5: Employment and vacancies

PROGRAMME 2014/2015 APPROVED POSTS

2014/2015 NUMBER OF EMPLOYEES

2014/2015 VACANCIES % OF VACANCIES

2013/2014 NUMBER OF EMPLOYEES

Executive Management 5 4 1 0.8 5

Senior Management 8 8 0 0 8

Professional Qualified 37 33 4 3 34

Skilled 50 44 6 4.7 44

Semi-Skilled 20 19 0 0 20

Unskilled 8 7 1 0.8 8

TOTAL 128 115 12 9.3 119


The table below indicates the appointments and terminations of personnel per occupational level during the year under review.

Table 6: Appointments and terminations

SALARY BANDEMPLOYMENT AT

THE BEGINNING OF PERIOD

APPOINTMENTS PROMOTION TERMINATIONS EMPLOYMENT AT END OF THE PERIOD

Executive Management 5 0 0 1 4Senior Management 8 0 1* 0 8Professional Qualified 34 3 0 3 33Skilled 44 3 1* 2 44Semi-Skilled 20 0 0 1 19Unskilled 8 0 0 0 7

TOTAL 119 6 2 7 115

* Two employees promoted: (1) Professional qualified to Senior Management, (1) promoted to the same categories of Junior management for different salary level.

WORKFORCE PROFILEAs at 31 March 2015, the employment equity staffing ratios stood at 98% blacks to 2% white; 60% female to 40% male; and 49% core function to 51% support function staff. The SADPMR’s headcount is 115 employees, as indicated in Table 7.

Table 7: Workforce profile

OCCUPATIONAL LEVELSMALE FEMALE FOREIGN

NATIONAL TOTALA C I W A C I W MALE FEMALE

Top Management 3 0 0 0 1 0 0 0 0 0 4Senior Management 4 0 1 0 3 0 0 0 0 0 8Professionally qualified and experienced specialists and mid-management

15 0 1 0 15 1 0 1 0 0 33

Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents

12 0 0 1 27 2 2 0 0 0 44

Semi-skilled and discretionary decision-making 8 0 0 0 10 1 0 0 0 0 19

Unskilled and defined decision making 2 0 0 0 5 0 0 0 0 0 7

TOTAL PERMANENT 44 0 2 1 61 4 2 1 0 0 115Temporary employees 0 0 0 0 0 0 0 0 0 0

GRAND TOTAL 44 0 2 1 61 4 2 1 0 0 115

* African = A, Coloured = C, Indian = I, White = W


Equity Targets and Employment Equity Status

Tables 8, 9 and 10 below indicate employment equity and targets during the period under review. The information is presented in terms of three categories: male, female and disabled persons.

Table 8: Current status and planned target (male employees)

LEVELS

MALE

AFRICAN COLOURED INDIAN WHITE

CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET

Executive Management 3 0 0 0 0 0 0 0Senior Management 4 0 0 0 1 0 0 0Professional Qualified 15 1 0 1 1 0 0 0Skilled 12 1 0 1 0 0 1 0Semi-Skilled 8 0 0 0 0 0 0 0Unskilled 2 0 0 0 0 0 0 0

TOTAL 44 2 0 2 2 0 1 0

Table 9: Current status and planned target (female employees)

LEVELS

FEMALE

AFRICAN COLOURED INDIAN WHITE

CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET

Executive Management 1 0 0 0 0 0 0 0Senior Management 3 0 0 0 0 0 0 0Professional Qualified 15 0 1 0 0 0 1 0Skilled 27 1 2 0 2 0 0 0Semi-Skilled 10 0 1 0 0 0 0 0Unskilled 5 0 0 0 0 0 0 0

TOTAL 61 1 4 0 2 0 1 0

Table 10 : Current status and planned target (disabled employees)

LEVELS

EMPLOYEES WITH DISABILITIES

MALE FEMALE

CURRENT TARGET CURRENT TARGET

Executive Management 0 0 0 0Senior Management 0 0 0 0Professional Qualified 0 0 0 0Skilled 0 0 0 0Semi-Skilled 0 1 0 1Unskilled 0 0 0 0

TOTAL 0 1 0 1


Labour Relations: Misconduct and Disciplinary action

The table below provides basic information on labour relations management during the period under review. All disciplinary and grievance cases were attended to within the reporting period.

Table 11: Labour relations - Misconduct and disciplinary action

NATURE OF DISCIPLINARY ACTIONS NUMBER

Verbal warning 3Written warning 1Final written warning 1Dismissal 0TOTAL 5

Staff Turnover

During the period under review seven employees left the organisation for various reasons, as reflected in the table below.

Table 12: Staff turnover

REASON NUMBER % OF TOTAL NO. OF STAFF LEAVING

Death 0 0Resignation 6 5Dismissal 0 0Retirement 1 1Ill Health 0 0Expiry of contract 0 0Other 0 0


CORPORATE GOVERNANCEPART D



CORPORATE GOVERNANCE

The SADPMR is established in terms of section 3 of the Diamond Act, No 29 of 2005, and is classified in terms of the Public Finance Management Act, 1999, as a Schedule 3A public entity.

THE DIAMOND ACT, NO 56 OF 1986, AS AMENDED (THE DIAMOND ACT)

As the enabling legislation of the SADPMR, the Diamond Act, 1986, provides for the objectives and functions of the SAPDMR. The Diamond Act, further, makes provision for the composition and appointment of the Board and the appointment of the Chief Executive Officer.

THE PUBLIC FINANCE AND MANAGEMENT ACT, 1999 (PFMA)

As a Schedule 3A public entity, the SADPMR’s corporate governance is achieved through the application of the provisions of the PFMA, read together with the King III Report on Corporate Governance.

Parliament, the Department of Mineral Resources (the executive authority of the SADPMR) and the Board of the SADPMR (the accounting authority) are responsible for the implementation of corporate governance within the SADPMR.

Parliament has an oversight role on the overall performance of the public entity. The Standing Committee on Public Accounts (SCOPA) reviews the Annual Financial Statements and audit reports of the external auditor. The Parliamentary Portfolio Committee on Mineral Resources (PPC) reviews and oversees all other functions and duties of the SADPMR, excluding financial matters. The SADPMR presented its Annual Report for the previous financial year, and its Strategic Plan, on 22 October 2014.

Executive Authority: The SADPMR is required to report its performance information and financial results quarterly to the Department of Mineral Resources and to align its activities, projects and initiatives to the department’s Strategic Plan.

The following are the members of the Board

1. Ms N Mkhumane Chairperson2. Mr S Phiri Deputy Chairperson3. Mr L Delport4. Mr L Grobler5. Mr R Paola6. Mr P Arendse7. Ms N Mokoena (alternate from SAPS)8. Ms D Mokgatle9. Ms D Mashile – (resigned in July, 2014) 10. Ms M Kobe11. Mr A Bezuidenhout (alternate from SARB)12. Mr P Bailey13. Ms N Xaba14. Mr S Ngcobo15. Ms Z Manase16. Mr M Mabuza (alternate from DMR)17. N Zikalala


Steve PhiriBoard Member

Andre BezuidenhoutBoard Member

Nombulelo MkhumaneChairperson

Levy RapooChief ExecutiveOfficer

Llewellyn DelportBoard Member

Ntombizodwa MokoenaBoard Member

MEMBERS OF THE BOARD

Motlatso KobeBoard Member


Leon GroblerBoard Member

Ntombifuthi ZikalalaBoard Member

Raymond PaolaBoard Member

Nthabiseng XabaBoard Member

Zodwa ManaseBoard Member

Peter BaileyBoard Member

Llewellyn DelportBoard Member

Mosa MabuzaBoard Member

Member not present: Pete Arendse

Sakhile NgcoboBoard Member


MEETINGS AND ATTENDANCEBOARD MEETINGChairperson: Ms N Mkhumane

NAME 29/04/2014 28/05/2014 06/08/2014 07/08/2014 30/09/2014 28/10/2014 27/02/2015N Mkhumane

S Phiri

L Rapoo

L Delport

L Grobler

M Mabuza

R Paola N Zikalala N Xaba

S Ngcobo

P Bailey A Bezuidenhout Z Manase

D Mashile-Nkosi*

P Arendse

M Kobe

N Mokoena * Resigned from the Board in July 2014

THE EXECUTIVE COMMITTEEChairperson: Ms N Mkhumane

NAME 15/04/2014 29/04/2014 28/05/2014 07/08/2014 30/09/2014 28/10/2014 27/02/2015N Mkhumane

S Phiri

L Rapoo

S Ngcobo

L Delport

N Zikalala

L Grobler

R Paola

AUDIT AND RISK COMMITTEE

Chairperson: Mr R Paola

NAMES 15/04/2014 15/05/2014 28/07/2014 18/09/2014 16/10/2014 20/01/2015R Paola

L Rapoo

L Grobler

N Xaba

S Vilakazi**

N Danisa

P Bersiks**

Z Manase

D Mashile-Nkosi*

* Resigned from the Board in July 2014 ** Independent Auditor


FINANCE COMMITTEEChairperson: Mr L Delport

NAMES 15/04/2015 15/05/2014 17/07/2014 18/09/2014 15/10/2014 20/01/2015L Delport

L Rapoo

R Paola

N Xaba

A Bezuidenhout

LICENSING COMMITTEEChairperson: Ms N Zikalala

NAME 17/07/2014 03/09/2014 14/01/2015 16/04/2015N Zikalala

L Rapoo

N Mokoena

P Bailey

M Kobe

TECHNICAL COMMITTEEChairperson: Ms N Zikalala

NAMES 16/04/2014 16/07/2014 15/10/2014 13/01/2014

L Grobler

L Rapoo

N Xaba

D Mashile-Nkosi

S Ngcobo

M Kobe

N Mokoena

RISK MANAGEMENT

The Board of the SADPMR, through its Audit and Risk Committee, has the overall responsibility to ensure that the SADPMR has and maintains effective, efficient and transparent systems of risk management and internal controls. The Audit and Risk Committee has an oversight role that is independent and objective in this regard. Furthermore, the Risk Steering Committee, which is comprised of Senior Management of the SADPMR, has the responsibility to ensure the adequacy and effectiveness of the risk management and internal control systems. The Risk Steering Committee continually reviews the risk management processes, internal controls and significant risks facing the organisation, and reports to the Audit and Risk Committee quarterly.

FRAUD AND CORRUPTION

The SADPMR has aligned itself with the government’s initiative to fight corruption, and it is allowed the use of the services of the National Anti-Corruption Hotline (NACH). The National Anti-Corruption Hotline is an initiative arising out of the government’s national anti-corruption strategy to combat and prevent corruption. Induction courses increase employees’ awareness and were held during the year under review.


Employees are encouraged to use the Anti-Corruption Hotline number (0800 701 701) to report any acts, or intentions to commit acts of any corruption. This may also be any act relating to SADPMR’s employees, services, clients and stakeholders. Clients and employees of SADPMR may make anonymous calls to the Hotline number, which is managed by the Office of the Public Service Commission.

MINIMISING CONFLICTS OF INTEREST

The SADPMR has transparent, effective procedures for identifying, disclosing and managing any conflicts of interest, which reduce the opportunities for corruption or improper conduct in the organisation. Every year members of the Board complete and submit a disclosure form indicating any other interests, as well as potential areas of conflict, if any. During board and committee meetings, members are regularly asked to disclose any conflicts of interest prior to issues being discussed. All SADPMR employees complete financial disclosure forms every year. Declaration measures are also in place to prevent conflicts of interest relating to job interviews, meetings, and bid evaluation and adjudication committees.

CODE OF CONDUCT

The South African Diamond and Precious Metals Regulator has a Code of Conduct that requires employees to conduct themselves with integrity, openness, accountability and transparency in all dealings with all stakeholders.

INTERNAL AUDIT

Internal Audit ensures that the SADPMR has effective and efficient internal controls in place and that these are properly implemented, as required by sections 51 and 77 of the Public Finance Management Act (PFMA), under the guidance of the Audit and Risk Committee. The key activities and objectives of the Audit and Risk Committee are to:

• Review financial statements for completeness, accuracy and to ensure they comply with disclosure requirements.

• Monitor the Regulator’s effectiveness and adequacy of internal control systems.

• Monitor the effectiveness and independence of the internal audit function.

• Review significant findings, recommendations and corrective action recommended by Internal Audit, together with Management’s responses.

• Assess the steps Management has taken to minimise significant risks and ensure that a risk management module is developed and maintained.

OBJECTIVE

The overall objective of the Audit and Risk Committee is to assist Management with their responsibility of creating and maintaining an effective control environment within the Regulator, including financial control, accounting systems and reporting, as well as identifying material risks and giving these the required attention.


AUDIT AND RISK COMMITTEE REPORT

We are pleased to present our report for the financial year ended 31 March 2015.

AUDIT COMMITTEE RESPONSIBILITY

The Audit Committee is a committee of the Board and has discharged its responsibilities accordingly in terms of section 51 (1) a (ii) of the PFMA and 27.1.8 of the Treasury Regulations. The Audit Committee adopted a formal terms of reference, its audit committee charter, and has regulated its affairs in compliance with the charter and has discharged its responsibilities contained therein.

EFFECTIVENESS OF INTERNAL CONTROL

During the year various reports of the Internal Auditors, as well as the Audit Report on the Annual Financial Statements and Management Letter of the Auditor-General indicated that the system of internal control has shortcomings in limited areas. The Audit Committee has noted these and based on the outcome of such reviews and the information provided by Management, the Audit Committee is of the opinion that the internal controls of the Regulator operated effectively throughout the year under review.

The Audit Committee is also of the view that progress has been made with respect to the control environment, especially in view of the fact that the SADPMR has achieved its third successive unqualified audit report.

RISK MANAGEMENT AND GOVERNANCE

A risk management framework and policy has been adopted and approved by the Board. A process of risk management was implemented by the Regulator wherein risk assessments are conducted on a quarterly basis by management and updated on an annual basis by the internal audit function at both senior management and Board level.

During the year, the Regulator adopted and approved various policies and procedures to strengthen the control environment.

MONTHLY AND QUARTERLY PERFORMANCE INFORMATION

The Audit Committee is satisfied with the content and quality of monthly and quarterly reports prepared and issued by the regulator to the Executive Authority during the year under review.

INTERNAL AUDIT

The Audit Committee reviewed the activities of the internal audit function and has concluded the following:

• The function is effective and that there were no unjustified restrictions or limitations; and• The internal audit reports were reviewed at Audit Committee meetings, including its annual work programme, co-

ordination with the external auditors, the reports of significant audit investigations and the responses of management to issues raised therein.


EVALUATION OF ANNUAL FINANCIAL STATEMENTS FOR 2014/2015 FINANCIAL YEAR

The Audit Committee has:

• Reviewed and discussed with the Auditor-General and the Accounting Authority the audited annual financial statements to be included in the annual Report;

• Reviewed the Auditor-General’s audit report, the Management Letter and Management’s responses thereto; and• Reviewed the significant adjustments resulting from the audit.

The Audit Committee concurs and accepts the conclusions of the Auditor-General on the Annual Financial Statements and is of the opinion that the audited financial statements be accepted and read together with the report of the Auditor-General and the Accounting Authority’s Report. The Audit Committee agrees that the adoption of the going concern premise is appropriate in preparing the Annual Financial Statements.

Mr Raymond PaolaChairperson of the Audit Committee


FINANCIAL INFORMATIONPART E

General Information ............................................................................................. 43Report of the Auditor-General ............................................................................ 44Accounting Authority’s Responsibilities and Approval ................................... 47Statement of Financial Position .......................................................................... 48Statement of Financial Performance .................................................................. 49Statement of Changes in Net Assets .................................................................. 50Statement of Cash Flow ...................................................................................... 51Accounting Policies ............................................................................................ 52Notes to the Annual Financial Statements ........................................................ 58Detailed Budget Statement ................................................................................. 71



GENERAL INFORMATION

COUNTRY OF INCORPORATION

Republic of South Africa

LEGAL FORM OF ENTITY

Schedule 3A entity listed in terms of the Public Finance Management Act, No. 29 of 1999 (PFMA) as amended.

NATURE OF BUSINESS AND PRINCIPAL ACTIVITIES

Regulating control over possession, the purchase and sale of diamonds, the processing and the export of diamonds and implementing, administering and controlling all matters relating to acquisition, possession, smelting, refining, fabrication, use and disposal of precious metals.

MEMBERS OF THE ACCOUNTING AUTHORITY

N Mkhumane ChairpersonS Phiri Deputy ChairpersonG L Rapoo Chief Executive OfficerR Paola Member S Ngcobo Member P Bailey Member L Delport Member P Arendse Member A Bezuidenhout Member L Grobler Member M Mabuza Member N Xaba Member M Kobe Member N Zikalala Member Z Manase Member NH Mokoena Member

BUSINESS ADDRESS POSTAL ADDRESS251 Fox Street PO Box 16001Jewel City Jewel CityJohannesburg Doornfontein2001 2028

BANKERS Nedbank Ltd

AUDITORS The Auditor-General of South Africa


REPORT OF THE AUDITOR-GENERAL

REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the South African Diamond and Precious Metals Regulator (SADPMR) set out on pages 48 to 72 which comprise statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets, and cash flow statement and detailed budget statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements

2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with Generally Recognised Accounting Principles (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999), and for such internal control as the accounting authority, other determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Opinion

5. In my opinion, the financial statements present fairly, in all material respects, the financial position of the SADPMR as at 31 March 2015 and its financial performance and cash flows for the year then ended, in accordance with SA Standards of GRAP and the requirements of the PFMA.


Emphasis of matter

6. My opinion is not modified in respect of this matter.

Restatement of corresponding figures

7. As disclosed in note 22 to the financial statements, the corresponding figures for 31 March 2014 have been restated as a result of an error discovered during 31 March 2015 in the financial statements of the SADPMR at, and for the year ended, 31 March 2015.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

8. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

9. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2015:

• Programme 2: Diamond Trade on pages 13 to 13

• Programme 3: Regulatory compliance on pages 14 to 14

10. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

11. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

12. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

13. I did not raise any material findings on the usefulness and reliability of the reported performance information for the selected objectives.

Additional matter

14. Although I raised no material findings on the usefulness and reliability of the reported performance information for the selected objectives, I draw attention to the following matter:

Achievement of planned targets

15. Refer to the annual performance report on pages 11 to 26 for information on the achievement of the planned targets for the year.


Compliance with legislation

16. I performed procedures to obtain evidence that the public entity had complied with applicable legislation regarding financial matters, financial management and other related matters. I did not identify any instances of material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA.

Annual financial statements, performance and annual reports

17. The financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of section 55(1)(a) of the PFMA. Material misstatements of non-current assets and current assets identified by auditors in the submitted financial statements were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

Internal control

18. I considered internal control relevant to my audit of the financial statements, predetermined objectives report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the non-compliance with legislation included in this report.

Financial and performance management

Regular, accurate and complete financial and performance report

19. Management did not prepare regular, accurate and complete financial reports as the financial statements contained numerous misstatements that were subsequently corrected.

OTHER REPORTS

Investigations

20. An investigation is pursued in response to the information received from the National Anti-corruption Hotline (NACH) regarding the employees alleged to have been involved in corrupt activities.

21. Investigation with respect to an employee who is alleged to have leaked confidential client information to the public.

Pretoria31 July 2015


ACCOUNTING AUTHORITY’S RESPONSIBILITIES AND APPROVAL

The members of the Board are required by the Public Finance Management Act (Act 1 of 1999), as amended, to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the accounting authority to ensure that the annual financial statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial statements and were given unrestricted access to all financial records and related data.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP).

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The members of the Board acknowledge that they are ultimately responsible for the system of internal financial control established by the entity and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the accounting authority sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The members of the Board are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.

The members of the Board have reviewed the entity’s cash flow forecast for the year to 31 March 2015 and in the light of this review and the current financial position, they are satisfied that the entity has or has access to adequate resources to continue in operational existence for the foreseeable future.

The Regulator is dependent on the Government grants, License, Penalties and Service Fees for continued funding of its operations. The annual financial statements are prepared on the basis that the Regulator is a going concern and that is has neither the intention nor the need to liquidate or curtail materially the scale of the entity. Although the members of the Board are primarily responsible for the financial affairs of the entity, it is supported by the entity’s internal auditors.

The Auditor-General of South Africa is responsible for independently auditing and reporting on the entity’s annual financial statements. The annual financial statements have been examined by the Auditor-General of South Africa.

The annual financial statements set out on pages 4 to 33, which have been prepared on the going concern basis, were approved by the accounting authority on 28 May 2015 and were signed on its behalf by:

Ms. N. Mkhumane Mr. G.L. RapooChairperson Chief Executive Officer


NOTES2015

R2014

R

AssetsNon-current AssetsProperty, plant and equipment 3 10,846,472 10,058,945Intangible assets 4 3,464,485 2,099,028Total Non-Current Assets 14,310,957 12,157,973

Current AssetsInventory 5 479,504 636,375Receivables from exchange transactions 6 3,719,846 2,804,701Financial instruments 12 21,684,644 23,264,363Cash and cash equivalents 7 20,229,784 18,317,325Total Current Assets 46,113,778 45,022,764Total Assets 60,424,735 57,180,737

Net Assets and LiabilitiesAccumulated Surplus 43,771,249 48,855,235

43,771,249 48,855,235Non-current LiabilitiesFinance lease obligations 8 57,160 115,952

57,160 115,952Current LiabilitiesPayables from exchange transactions 10 5,959,272 5,481,423Provisions 11 10,120,821 2,006,000Current portion of long term liabilities 8 127,614 81,810Deferred income 14 - 151,637Operating lease liability 9 388,619 488,680Total Current Liabilities 16,596,326 8,209,550Total Net Assets and Liabilities 60,424,735 57,180,737

Statement of FINANCIAL POSITIONas at 31 March 2015 (Restated)

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015


NOTES2015R’000

2014R’000

RevenueRevenue from exchange transactionsLevy income, license, penalty and service fees 36,402,529 33,425,943Interest received 2,371,869 2,373,403Other income 13 1,092,708 651,477

Revenue from non-exchange transactionsTransfer payment (Grant) 47,810,000 44,824,000Total 87,677,106 81,274,823

ExpenditureFinance costs 34,724 28,661Debtors impairment 6 (352,708) 519,384Debt written off - 2,350Employee costs 17 59,818,920 54,859,523Depreciation and amortisation 1,004,013 3,460,850Other operating expenses 16 32,122,550 27,043,703Total expenditure 92,627,499 85,914,471

Loss on disposal of property, plant and equipmentFair value adjustment 12 (8,508) (179,640)Total other expenses (125,085) (22,404)Deficit for the period (133,593) (202,044)

(5,083,986) (4,841,692)

Statement of FINANCIAL PERFORMANCE for the year ended 31 March 2015 (Restated)



Accumulated surplusrestated

RTotal

R

Balance at 01 April 2013 53,696,927 53,696,927Deficit for the period (4,841,692) (4,841,692)Balance at 31 March 2014 48,855,235 48,855,235

Balance at 01 April 2014 48,855,235 48,855,235Deficit for the period (5,083,986) (5,083,986)Balance at 31 March 2015 43,771,249 43,771,249

Statement of CHANGES IN NET ASSETSfor the year ended 31 March 2015



NOTES2015R’000

2014R’000

Cash flows from operating activitiesCash receipts from customers, government and others 84,390,093 78,419,847Transfer payment (Grant) 47,810,000 44,824,000Other receipts 36,580,093 33,595,847Cash paid to suppliers and employees (82,983,291) (85,758,812)Cash (used in) generated from operations 25 1,406,802 (7,338,965)

Interest received 2,264,239 2,262,620Finance costs (34,724) (28,661)Net cash from operating activities 3,636,317 (5,105,006)

Cash flows from investing activitiesProperty, plant and equipment acquired 3 (1,792,737) (3,890,512)Intangible assets acquired 4 (1,372,768) (856,334)Decrease in financial instruments at fair value 12 2,736,611 16,910,714Re-investment of interest (1,281,977) (1,771,749)Net cash flows from investing activities (1,710,871) 10,392,119

Cash flows from financing activitiesIncrease/ (Decrease) in finance lease obligations (12,987) 79,611

Increase/ (Decrease) in cash and cash equivalents 1,912,459 5,366,724Cash and cash equivalents at beginning of the period 18,317,325 12,950,601Cash and cash equivalents at end of the period 20,229,784 18,317,325

Statement of CASH FLOW for the year ended 31 March 2015 (Restated)



ACCOUNTING POLICIES for the year ended 31 March 2015

1. BASIS OF PREPARATION

The following are the principal accounting policies of the SADPMR which are, in all material respects, consistent with those applied in the previous period. The historical cost convention has been used, except where indicated otherwise.

Management has used assessments and estimates in preparing the financial statements – these are based on the best information available at the time of preparation. The financial statements have been prepared on a going concern basis.

2. PRESENTATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practices (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board and the National Treasury.

All amounts have been presented in the currency of South African Rand, which is the functional currency of the SADPMR.

2.1 REVENUE RECOGNITION

Revenue from exchange transactions

Revenue from the sale of diamond books and registers is recognised at the date of sale.

Revenue from licence fees is recognised upon receipt of applications and subsequent payment.

Revenue from service fees is recognised when services are completed and billed.

Revenue from non-exchange transactions

Transfer payments from the Department of Mineral Resources (DMR) are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

Interest received

Interest received is recognised on a time proportionate basis using the effective interest rate method.

2.2 PROPERTY, PLANT AND EQUIPMENT

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Depreciation is charged to surplus/deficit so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method.

Useful lives and residual values are assessed on an annual basis.


The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost. Where an asset is acquired at no or nominal cost, its costs is its fair value as at the date of acquisition.

The estimated useful lives of property, plant and equipment are currently as follows:

Item Years Revised useful lifeFurniture and fittings 10 years 20 yearsMotor vehicles 8 - 10 years 10 yearsOffice equipment 5 years 10 yearsComputer equipment 3 years 5 yearsSecurity equipment - safes 20 years 50 yearsSecurity systems - other 10 years 10 yearsLeased office equipment Over the shorter of the lease term or useful life n/aLeasehold improvements Over the lease period or useful life n/aSwitchboard equipment 5 years 5 years

During the year under review, assets that had zero carrying amount and were set aside for disposal were brought back to circulation. This was due to the factors such as the budget cut and the implementation of cost containment measures. An independent assessor was engaged to assess the useful lives of these assets.

During this exercise it was noted the useful lives of some of the assets were still more than the revised ones which resulted in some inconsistencies with the above policy. These assets were depreciated using the revised useful lives on the assessor’s report.

Included in our records is a motor vehicle that has reached its useful life i.e. with zero carrying amount. Since maintaining and repairing the motor vehicle is no longer economical, the Board has approved as part of the capital budget, disposal and replacement thereof during the 2015/16 financial year.

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

Gain or loss arising from derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. Gain or loss arising from derecognition of an item of property, plant and equipment is determined as the difference between net disposal proceeds, if any, and carrying amount of the item.

2.3 INTANGIBLE ASSETS

Intangible assets are stated at cost less accumulated amortisation. Amortisation is charged to surplus/deficit so as to write off the cost or valuation of intangible assets over their estimated useful lives, using the straight- line method.

The amortisation period and the amortisation method for intangible assets are reviewed on an annual basis. The cost of an item of intangible assets is the purchase price and other costs attributable to bring the asset to

the location and condition necessary for it to be capable of operating in the manner intended by management.

Trade discounts and rebates are deducted in arriving at the cost. Where an asset is acquired at no or nominal cost, its costs is its fair value as at the date of acquisition.

Intangible assets are derecognised on disposal or when no future economic benefits or service potential are expected from its use or disposal.

ACCOUNTING POLICIES (continued)


Gain or loss arising from derecognition of intangible assets is included in surplus or deficit when the item is derecognised. Gain or loss arising from derecognition of intangible assets is determined as the difference between net disposal proceeds, if any, and carrying amount of the item.

The estimated useful lives of intangible assets are currently as follows:

Item YearsSoftware owned 3 yearsLeased software Over the shorter of the lease term or useful life

2.4 USE OF ESTIMATES AND JUDGEMENTS

Preparation of financial statements in conformity with GRAP requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenditure. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected

During the year under review, assets that had zero carrying amount and were set aside for disposal were brought back to circulation. This was due to the factors such as the budget cut and the implementation of cost containment measures. An independent assessor was engaged to assess the useful lives of these assets. During this exercise it was noted the useful lives of some of the assets were still more than the revised ones which resulted in some inconsistencies with the above policy. These assets were depreciated using the revised useful lives on the assessor’s report. Useful lives of assets will be reviewed annually.

2.5 LEASES

Finance leases – lessee

Finance leases are recognised as assets in the statement of financial position at amounts equal to the lower of fair value of the leased property and the present value of the minimum lease payments. Corresponding lease commitments are recognised in the statement of financial position as finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases – lessee

Operating lease payments are recognised as an expense in the statement of financial performance on a straight- line basis over the lease term. The difference between the actual amounts and straight lined amounts is recognised as an operating lease asset or liability in the statement of financial position.



2.6 PROVISIONS AND CONTINGENCIES

Provisions

Provisions are recognised when the SADPMR has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits or service potential will be required to settle the obligation, and a reliable estimate can be made of the obligation. All provisions of the SADPMR are short- term in nature and thus ignore the effect of discounting.

Contingent liabilities

These are liabilities that will only become payable by the SADPMR should some other event occur. Due to the uncertainty of the occurrence or non occurrence of such events, (the actual amount of the liability may not have been established), these are not accounted for in the statement of financial position and they are disclossed in the notes to the financial statements.

Contingent assets

These are possible assets that arise from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Due to the uncertainty of the occurrence or non occurence of such events, they are not accounted for in the statement of financial position and they are only disclosed in the notes to the financial statements.

2.7 INVENTORY

Inventory consists of broker’s notes, certificates and registers held for resale and consumables held for office use.

Subsequent measurement

Inventories are measured at the lower of cost or current replacement cost where they are held for distribution at no charge or for a nominal charge.

Cost is determined on the following basis:

Broker’s notes, certificates, registers and consumables are valued using the first-in-first-out basis.

Cost of sales

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down, adjustments and all deficits of inventories are recognised in the surplus or deficit.



2.8 FINANCIAL INSTRUMENTS

Initial recognition and measurement

All financial instruments are initially recognised at fair value including transaction costs, with the exception of financial instruments measured at fair value through surplus or deficit, which are valued at fair value excluding transaction costs.

• Trade and other receivables from exchange transactionsTrade and other receivables from exchange transactions are stated at amortised cost, which, due to their short- term nature, closely approximate their fair value.

Other receivables consist of deposits relating to the leasing of premises and legal fees recoverable.

• Trade and other payables from exchange transactionsTrade and other payables from exchange transactions are stated at amortised cost, which, due to their short- term nature, closely approximate their fair value.

• Financial instruments at fair valueFinancial instruments at fair value are subsequently measured at fair value and the fair value adjustments are recognised in the surplus or deficit.

• Cash and cash equivalentsCash and cash equivalents are stated at amortised cost, which, due to their short-term nature, closely approximate their fair value. Cash and cash equivalents comprise cash at bank, cash on hand and deposits held on call. Bank overdrafts are recorded as current liabilities.

• OffsettingFinancial assets and financial liabilities have not been offset in the Statement of Financial Position.

• Impairment of financial assetsAt the end of each reporting period the entity assesses all financial assets, other than those at fair value through surplus or deficit, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the entity, significant financial difficulties of the debtor, probability that the debtor will enter

bankruptcy and default of payments are all considered indicators of impairment. As the indicators are subject to uncertainty and as such may change in future financial periods. Such changes in estimates may have the effect of decreasing impairment losses recognised. The carrying amount of the receivable is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as irrecoverable.

Impairment losses are recognised in surplus or deficit.

• DerecognitionA financial asset (or, where applicable, a part of a financial asset) is derecognised when:

- The rights to receive cash flow from the asset have expired;

- The entity retains the right to receive cash flow from the asset, but has assumed the obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

- The entity has transferred its right to receive cash flows from the asset and either:

◦ Has transferred substantially all the risks and rewards of the assets, or

◦ Has neither transferred nor retained substantially all the risks and rewards of the assets, has transferred control of the asset,



A financial liability is derecognised when an obligation under the liability is discharged, cancelled or expires. On derecognition, the difference between the carrying amount of the financial assets and the sum of the proceeds receivable and any prior adjustment to reflect the fair value of the asset that had been reported in net assets, is included in the surplus or deficit for the period.

2.9 ACCRUALS

Accruals are recognised as liabilities when the entity has taken receipt of the related goods or services without a corresponding invoice having been issued.

The amount of accruals is the present value of the expenditure required to settle the obligation. Accruals are not recognised for future operating deficits.

2.10 BUDGETS

Budget information in accordance with GRAP 1 and 24, has been provided in a separate statement of comparison of budget and actual performance. The operational budget is monitored against actual expenditure incurred.

2.11 STANDARDS AND PRONOUNCEMENTS COMPRISING THE GRAP FINANCIAL REPORTING FRAMEWORK

The following standards have been approved but are not yet effective as at 31 March 2015. The impact that these standards will have on the entity is detailed below. A list of these standards is provided below:

GRAP STANDARDS IMPACT EFFECTIVE DATE

GRAP 18 Segment reportingThis standard will have no effect as the managerial and financial operations functions of the SADPMR are centralised in the Johannesburg Head Office.

01 April 2015

GRAP 20 Related party disclosures The SADPMR complies with the standard requirements. No effective date.

GRAP 32Service ConcessionArrangements: Grantor

This standard will have no impact as the SADPMR does not engage in service concession arrangements. No effective date.

GRAP 108 Statutory ReceivablesThis standard will have an impact on the SADPMR, as there are receivables raised on the basis of legislative requirements.

No effective date.

GRAP 105 Transfer of functions between entities under common control

This will have an impact on the entity, if the Executive Authority (Department of Mineral Resources) implements the transfers.

01 April 2015

GRAP 106 Transfer of functions between entities not under common control

This will have an impact on the SADPMR, if the Executive Authority implements the transfers. 01 April 2015

GRAP 107 Mergers This will have an impact on the SADPMR, if the Executive Authority engages in these types of transactions. 01 April 2015



NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2015

3. PROPERTY, PLANT AND EQUIPMENT

Owned and leased assetsCost

R

Accumulated depreciation

R

31 March 2015 Carrying value

RCost

R

Accumulated depreciation

R


R

Computer equipment 6,298,712 (4,446,243) 1,852,469 5,976,147 (4,224,337) 1,751,810

Furniture and fittings 4,008,516 (1,492,804) 2,515,712 3,876,721 (1,371,445) 2,505,276

Leased Office equipment 346,986 (181,624) 165,362 374,543 (189,860) 184,683

Leasehold improvements 2,043,109 (1,162,730) 880,379 1,459,443 (793,408) 666,035

Motor vehicles 1,959,011 (1,082,243) 876,768 1,959,011 (902,248) 1,056,763

Office equipment 3,921,142 (1,175,115) 2,746,027 3,115,605 (1,126,455) 1,989,150

Security systems, machinery and safes 4,322,400 (2,512,645) 1,809,755 4,184,169 (2,278,941) 1,905,228

22,899,876 (12,053,404) 10,846,472 20,945,639 (10,886,694) 10,058,945

The carrying amounts of property, plant and equipment are reconciled as follows:

Owned and leased assets: 2015

Opening carrying value

RAdditions

RDisposals

RDepreciation

RTransfers

R


R

Computer equipment 1,751,810 275,748 - (175,089) - 1,852,469

Furniture and fittings 2,505,276 - (445) 15,651 (4,770) 2,515,712

Leased Office equipment 184,683 91,271 - (110,592) - 165,362

Leasehold improvements 666,035 583,666 - (369,322) - 880,379

Motor vehicles 1,056,763 - - (179,995) - 876,768

Office equipment 1,989,150 829,033 (8,063) (68,863) 4,770 2,746,027

Security systems, machinery and safes 1,905,228 13,019 - (108,492) - 1,809,755

10,058,945 1,792,737 (8,508) (996,702) - 10,846,472


Opening carrying value

RAdditions

RDisposals

RDepreciation

RTransfers

R


R

Computer equipment 3,244,214 198,492 (9,862) (1,681,034) - 1,751,810

Furniture and fittings 1,401,692 1,605,868 (143,825) (358,459) - 2,505,276

Leased Office equipment 80,168 255,715 - (151,200) - 184,683

Leasehold improvements 1,014,955 - - (348,920) - 666,035

Motor vehicles 701,531 526,055 - (170,823) - 1,056,763

Office equipment 879,098 1,056,874 (16,438) 69,616 - 1,989,150

Security systems, machinery and safes 2,454,963 247,508 (6,481) (790,762) - 1,905,228

Switchboard equipment 10,907 - (6,305) (4,602) - -

9,787,528 3,890,512 (182,911) (3,436,184) - 10,058,945

Obligations under finance leases are secured by the lessors’ title to the leased assets. Carrying value of assets pledged as security.

(Restated)

(Restated)


4. INTANGIBLE ASSETS

Owned and leased assetsCost

R

Accumulated amortisation

R


RCost

R

Accumulated amortisation

R


R

Computer software - owned 3,476,882 (12,397) 3,464,485 2,403,147 (304,119) 2,099,028

Leased software - - - 78,323 (78,323) -

3,476,882 (12,397) 3,464,485 2,481,470 (382,442) 2,099,028

The carrying amounts of intangible assets are reconciled as follows:


Carrying value at beginning of

periodR

AdditionsR

AmortisationR

DisposalsR


R

Computer software - owned 2,099,028 1,372,768 (7,311) - 3,464,485

2,099,028 1,372,768 (7,311) - 3,464,485


Carrying value at beginning of

periodR

AdditionsR

AmortisationR

DisposalsR


R

Computer software - owned 1,249,912 856,334 (5,086) (2,132) 2,099,028

Leased software 19,581 - (19,581) - -

1,269,493 856,334 (24,667) (2,132) 2,099,028

5. INVENTORY2015

R2014

R

Inventory comprises:Consumables 200,521 179,838Broker's notes, certificates and registers 29,875 60,348Tamper proof stationery 249,108 396,189

479,504 636,375

Inventory consists of items on hand as at 31 March 2015. The cost of inventory recognised as an expense is included under other operating expenses.

6. RECEIVABLES FROM EXCHANGE TRANSACTIONS

Receivables 3,323,661 2,134,540Debtors impairment (1,343,968) (1,696,676)Staff debtors 63,269 113,881Prepaid expenses 1,199,210 1,974,930Interest receivable 107,629 110,783Other receivables 370,045 167,243

3,719,846 2,804,701

Staff debtors consists of unpaid leave days, study fees and telecommunication costs.

Reconciliation for debtors impairmentOpening balance 1,696,676 1,177,292Reversed/additions during the period (352,708) 519,384Closing balance 1,343,968 1,696,676

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)

(Restated)

(Restated)

(Restated)


7. CASH AND CASH EQUIVALENTS2015

R2014

R

Cash on hand 426,963 63,645Call accounts 18,088,048 17,345,911Current accounts 1,714,773 907,769

20,229,784 18,317,325

8. FINANCE LEASE OBLIGATIONS

Lease of photocopiers with Merchant West Asset Finance (Pty) Ltd, Pinnacle Solutions (Pty) Ltd, and Fintech (Pty) Ltd

57,160 115,952

Repayable within one year, transferred to current liabilities 127,614 81,810184,774 197,762

Reconciliation between the total of the minimum lease payments and the present value:

Minimum lease payments 204,532 237,059- No later than 1 year 144,897 109,412- Later than 1 year and no later than 5 years 59,635 127,647Future finance charges on finance leases (19,758) (39,297)

184,774 197,762

It is the practice of the SADPMR to lease items of office equipment under finance leases.

9. OBLIGATIONS UNDER OPERATING LEASES

At the statement of financial position date, the company has outstanding commitments under non-cancellable operating leases that fall due as follows:Johannesburg Office 3,214,744 5,299,778- Not later than one year 2,248,554 2,085,034- Greater than one year, less than five 966,190 3,214,744

The SADPMR entered into a 5 year lease agreement with Redefine Properties Ltd, for the rental of office space in the Jewel City, Johannesburg. The lease commenced on 01 September 2011 and terminates on 31 August 2016, and provides for an escalation of rental of 8% per annum on rental and parking. The lease payment is R112 731, with additional charges for parking at R26 791 and security at R3 420 per month.Kimberley Office 169,993 562,521- Not later than one year 169,993 392,529- Greater than one year, less than five - 169,992

The SADPMR entered into a 3 year lease agreement with Providence Family Trust, for the rental of Kimberley office. The lease commenced on 27 August 2012 and terminates on 01 September 2015 and provides for an escalation of rental of 10% per annum. The lease payment is R27 588 per month, with no additional charges.

Total lease obligations 3,384,737 5,862,299- Not later than one year 2,418,547 2,477,563- Greater than one year, less than five 966,190 3,384,736

Receivables/payables from operating leases reflect the difference between the actual lease payments and the straight-lined amounts.The balances were as follows as at the end of the reporting period.Leased liability 388,619 488,680

(Restated)

NOTES TO TH E ANNUAL FINANCIAL STATEMENTS (continued)


10. PAYABLES FROM EXCHANGE TRANSACTIONS2015

R2014

R

Accruals 3,701,255 2,571,469Trade creditors 1,199,471 1,366,572Export levy - 771,000Payroll third party payables 918,526 701,660Other payables 140,020 70,722

5,959,272 5,481,423

All payables are paid within 30 days, where possible and where there are no disputes Payables are not secured.

11. PROVISIONS

Legal fees 5,000,000 -Performance bonus 5,120,821 2,006,000

10,120,821 2,006,000

Legal fees provisions are raised to the extent that it is probable the SADPMR will be required to honour obligations. Legal fees provision pertain to the pending labour related case.

Reconciliation of provision for performance bonus:Carrying amount at the beginning of the period 2,006,000 2,600,000Amounts incurred and charged against the provision (2,119,049) (3,921,845)Underprovision/(Overprovision) of performance bonus 113,049 1,321,845Additions 5,120,821 2,006,000Carrying amount at end of the period 5,120,821 2,006,000

12. FINANCIAL INSTRUMENTS AT FAIR VALUE

Type: Financial instruments held for tradingOpening balance 23,264,363 38,425,732Interest received 1,281,977 1,771,749Withdrawals - other capital projects (2,736,611) (9,392,413)Withdrawals - Kimberley Process - (7,518,301)Fair value adjustment (125,085) (22,404)Closing balance 21,684,644 23,264,363

13. OTHER INCOME

Administration Fee (client fees) 17,996 18,040Bad Debts Recovered - 48,500Discount Received 27,893 64,317MQA grant income 173,159 108,783Recovery of expenses 782,147 309,717Sale of diamond books and registers 88,513 78,720Sale of tender documents 3,000 23,400

1,092,708 651,477


(Restated)


14. DEFERRED INCOME2015

R2014

R

Prior year deferred income was as a result of amounts received in cash but not yet accounted for as revenue. These amounts related to cash received from the Mining Qualification Authority (MQA) for training and development. All funds received from MQA during the current year have been accounted for as revenue.Reconciliation of deferred income:Carrying amount at the beginning of the period 151,637 257Received during the period 21,522 260,163Amounts incurred and charged against the income (173,159) (108,783)Carrying amount at end of the period - 151,637

15. AUDITORS’ FEES

External audit 2,767,839 1,698,457Other services - 180,000

2,767,839 1,878,457

16. OTHER OPERATING EXPENSES

Administration 114,450 85,698Advertising 204,439 110,964Audit Fees 2,767,839 1,878,457Board 1,285,088 1,540,484Consulting fees 1,091,854 462,414CSR Programmes - 9,283Domestic Travel 346,454 574,250Hospitality 11,589 27,457Inspection and compliance expenses 369,894 744,767Insurance 3,851,905 1,283,086International travel 1,694,911 1,723,753Inventory 780,716 826,450Kimberley Process 1,652 7,730,361Legal fees 11,578,800 232,233Licences 548,033 772,277Medical expenses-retired staff 100,900 101,438Office lease 3,179,850 3,486,237Office relocation - 31,396Postage and courier 26,538 29,680Publications - 38,680Recruitment and selection costs 147,080 153,263Repairs and maintenance 717,590 563,722Security 794,848 765,463Sponsorship and special programmes - 292,618Staff recognition - 2,527Staff Welfare 114,635 184,641Subscriptions and membership fees 58,220 102,130Telecommunication 1,758,083 2,208,655Training and Development 395,946 571,767Venue and Facilities 135,497 478,105Warehousing 45,739 31,447

32,122,550 27,043,703

(Restated)



17. EMPLOYEE COSTS2015

R2014

R

Basic salaries 50,370,067 42,086,691Bonus -13th cheque 1,956,530 2,104,433Car allowance 106,800 -Disability cover 675,731 664,378Housing allowance 174,000 197,000Leave pay provision 811,247 377,266Medical aid - employer's contributions 1,823,368 1,847,673Occupational Injuries and Diseases - COID 74,607 139,200Performance bonus (550,356) 3,302,785Post-employment benefits - Pension 3,674,335 3,455,158Skills Development Levy (SDL) 497,727 481,100Unemployment Insurance Fund (UIF) 204,864 203,839

59,818,920 54,859,523

18. EXECUTIVE AND NON-EXECUTIVE MEMBERS’ REMUNERATION

CHIEF EXECUTIVE OFFICER, GENERAL MANAGERS AND MANAGERSL Rapoo - Chief Executive OfficerBasic Salary 1,752,750 1,621,521Bonus - 13th cheque 89,398 84,628Disability cover 36,397 33,358Leave payout 94,695 -Performance bonus 155,726 163,002UIF, Medical and Pension fund 47,568 25,919

2,176,534 1,928,428

I Tshifura - Chief Financial OfficerBasic Salary 1,199,123 1,101,865Bonus - 13th cheque 66,994 63,419Disability cover 14,899 14,993Performance bonus 87,135 56,713UIF, Medical and Pension fund 150,814 136,545

1,518,965 1,373,535

M Mononela - GM: Legal and ComplianceBasic Salary 1,232,700 1,141,909Bonus - 13th cheque 66,994 63,419Disability cover 14,899 14,993Performance bonus 61,461 73,679UIF, Medical and Pension fund 116,980 96,501

1,493,034 1,390,501


(Restated)


18. EXECUTIVE AND NON-EXECUTIVE MEMBERS’ REMUNERATION (continued)

2015R

2014R

S Sikhosana - GM: Regulatory compliance (Retired 31/12/2014)Basic Salary 784,265 963,114Bonus - 13th cheque 72,829 63,419Car allowance 97,200 129,600Disability cover 11,081 14,993Leave payout 117,306 -Performance bonus 82,986 110,518UIF, Medical and Pension fund 133,476 144,562

1,299,143 1,426,206

C Mlondo - GM: Security and Risk ManagementBasic Salary 1,248,396 1,098,709Bonus - 13th cheque - 58,127Disability cover 14,927 15,021Performance bonus 35,336 73,820UIF, Medical and Pension fund 172,475 147,483

1,471,134 1,393,160

KE Makgohlo - Manager: Human Resources (Resigned 31/03/2014)Basic Salary - 829,799Bonus - 13th cheque - 46,085Disability cover - 10,880Performance bonus 60,304 72,210UIF, Medical and Pension fund - 70,613

60,304 1,029,587

A Damarupurshad - Manager: Precious Metals and BeneficiationBasic Salary 896,534 838,888Car allowance 9,600 9,600Disability cover 10,877 10,880Performance bonus 42,966 49,314UIF, Medical and Pension fund 115,762 98,008

1,075,739 1,006,690

J Lenka - Manager: DiamondsBasic Salary 945,714 863,884Disability cover 10,877 10,880Housing allowance - 12,000Performance bonus 44,662 56,359UIF, Medical and Pension fund 85,507 70,613

1,086,760 1,013,736

(Restated)




2015R

2014R

S Engelbrecht - Manager: Licencing (Compliance) (Retired: 31/05/2013)Basic Salary - 142,135Bonus - 13th cheque - 15,799Disability cover - 84,859UIF, Medical and Pension fund - 1,764

- 244,557

C Benn - Manager: Government Diamond ValuatorBasic Salary 848,158 785,970Bonus - 13th cheque 48,683 46,085Disability cover 10,877 10,880Performance bonus - 89,822UIF, Medical and Pension fund 132,665 114,441

1,040,383 1,047,198

S Mandlazi - Manager: FinanceBasic Salary 973,930 875,137Disability cover 11,348 11,351Performance bonus 62,960 90,469UIF, Medical and Pension fund 99,709 112,978

1,147,947 1,089,935

P Maka - Manager: Information and Communications TechnologyBasic Salary 865,679 802,294Bonus - 13th cheque 48,854 46,247Disability cover 10,914 10,917Performance bonus 62,785 55,850UIF, Medical and Pension fund 119,210 101,274

1,107,442 1,016,582

L Nkhumishe - Company SecretaryBasic Salary 875,622 811,633Bonus - 13th cheque 48,854 46,247Disability cover 10,914 10,917Performance bonus 86,991 106,397UIF, Medical and Pension fund 109,246 91,935

1,131,627 1,067,129

M Babu - Manager: Licencing (Compliance)Basic Salary 830,715 255,009Bonus - 13th cheque 47,833 -Disability cover 10,690 3,386UIF, Medical and Pension fund 133,146 38,758

1,022,384 297,153


(Restated)



2015R

2014R

OA Thulare - Manager: Human Resources (Appointed 01/12/2014)Acting allowance 161,308 -Basic Salary 641,646 -Bonus - 13th cheque 28,415 -Disability cover 8,269 -UIF, Medical and Pension fund 63,017 -

902,655 -

TOTAL EXECUTIVE REMUNERATION 16,534,051 15,324,397

This represents the total cost to company; employees have the choice to structure their packages.

Non-executive members of the Board and Other Committees

No of meetings Paid to members Paid to

employers 2015 2014

N Mkhumane 14 105,056 - 105,056 99,712S Phiri 10 41,536 - 41,536 33,312L Grobler 24 123,376 - 123,376 127,280A Bezuidenhout 10 - 22,448 22,448 10,224RJ Paola 21 - 108,944 108,944 106,928L Delport 16 - 89,152 89,152 108,160D Mashile-Nkosi# 0 - - - 22,448P Bailey 11 59,232 - 59,232 73,680N Xaba 17 - 81,904 81,904 104,464B Luthuli# 0 - - - 12,336P Bersiks ( Independent Member)## 5 20,560 - 20,560 -S Ngcobo 9 - 53,792 53,792 73,472Z Manase## 2 10,224 - 10,224 -S Vilakazi ( Independent Member)## 5 20,560 - 20,560 -

380,544 356,240 736,784 772,016# Resigned ## AppointedThese fees exclude evaluation, training and other re-imbursive expenses.

19. RELATED PARTY TRANSACTIONS

During the period, the entity entered into the following transactions:

Name and nature of servicesAmounts received from related party Amount owed by / (to)

related party at the end

2015 2014 2015 2014

Department of Mineral Resources 47,810,000 44,824,000 - -

The transactions relate to the transfer payment (grant) from the Department of Mineral Resources and there were no balances at the end of the year.

(Restated)



20. IRREGULAR EXPENDITURE2015

R2014

R

During the period under review, management did not detect any irregular expenditure.

21. FRUITLESS AND WASTEFUL EXPENDITURE

During the period under review, management did not detect any fruitless and wasteful expenditure.

22. CORRECTION OF ERRORS

During the year, SADPMR discovered that the following errors occurred in the financial year ended 31 March 2014:

There was an error in the operating lease due to incidental costs included in the straight lining of the lease calculation. The prior period was adjusted retrospectively.

The effect of the error on the individual line items in the financial statements is as follows:

Increase in operating lease expense - 444,298Decrease in surplus for the period - (444,298)

There was an error in the depreciation expenses due to the duplicate reversal. The prior period was adjusted retrospectively.


Increase in depreciation expense - 80,168Decrease in surplus for the period - (80,168)

During the year under review, assets that had zero carrying amount and were previously set aside for disposal were brought back to circulation. This was due to factors such as budget cuts and implementation of cost containment measures. This was accounted for as an accounting error and adjusted retrospectively.


Decrease in depreciation expense - (508,192) Increase in surplus for the period - 508,192

The opening balance on the Accumulated Surplus account as at 1 April 2014 is restated to take into account the corrected errors.

23. CONTINGENT LIABILITIES

The SADPMR legal representative has brought to our attention that they are in the process of making arrangements to enrol a long outstanding matter to the Court. Estimation of the financial exposure should this matter be enrolled and finalised is R500,000.00


(Restated)


24. FINANCIAL RISK MANAGEMENT2015

R2014

R

In the course of normal operations, the SADPMR has limited exposure to the financial risks and attempts to manage the following financial risks:

Liquidity risks

The entity manages liquidity risk through proper management of working capital, capital expenditure and actual versus forecasted cash flows. Adequate reserves and liquid resources are also maintained.

The maturity analysis of trade payables at reporting date were as follows:

PayablesNot past due 1,010,529 1,067,407Past due 0-30 days 197,848 200,225Past due 31-120 days (8,937) 4,341Past due 121 days and over (738) 86

1,198,702 1,272,059

The following are the entity’s other liabilities, including interest payments:Not later than one yearFinance lease obligations 127,614 81,810Provisions 10,120,821 2,006,000Deferred income - 151,637

10,248,435 2,239,447

Greater than one year, less than fiveFinance lease obligations 57,160 115,952

57,160 115,952

Market Risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in commodity prices, interest rates and equity prices.

A significant part of the market risk encountered arises from financial instruments that are managed by other financial institutions.

The objective of the market risk management policy is to protect and enhance the statement of financial position and surplus or a deficit by managing and controlling market risk exposures and to optimise the funding of business operations and facilitate capital expansion.

Interest Rate Risk

Deposits and call accounts attract interest rates that vary with prime. The SADPMR’s policy is to manage interest rate risk by investing in a range of balanced portfolios so that fluctuations in variable rates do not have a material impact on the surplus or (deficit).

At the end of the quarter, financial instruments exposed to interest rate risk were as follows:

(i) Balances with banks, current and call accounts.

(Restated)



24. FINANCIAL RISK MANAGEMENT(CONTINUED)

2015R

2014R

Credit Risk

Credit risk is the risk of financial loss to the entity if a customer or other counterparty (including government and financial institutions) to a financial instrument fails to meet its contractual obligations. Credit risk arises primarily from the sale of goods and services in the ordinary course of business. Credit risk includes counterparty risk and delivery or settlement risk. Counterparty risk is the risk that a counterparty is unable to meet its financial and/or contractual obligations during the period of a transaction.

Credit risk consists mainly of call deposits, cash equivalents and trade receivables. The SADPMR only deposits cash with major banks with high quality credit standing and limits exposure to any one counter party. Trade receivables are presented net of allowance for doubtful receivables.

The maximum exposure to credit risk of financial assets is:

Loans and receivables 3,864,604 2,526,447Financial instruments at fair value 21,684,644 23,264,363Cash and cash equivalents 20,229,784 18,317,325

45,779,032 44,108,135

The ageing of the entity’s trade receivables is as follows:

2015 2014

Gross Impaired Gross Impaired

0 - 30 days 1,537,710 629,434 74,794 7,47931- 60 days 155,852 1,876 1,420,044 284,00961- 90 days 26,666 3,000 78,377 31,351Over 91 days 1,463,434 709,658 1,419,201 1,373,836

3,183,662 1,343,968 2,992,416 1,696,675

The impairment of debtors is analysed as follows:2015

R2014

R

Debtors with expired licence not renewed 595,658 -Long outstanding and doubtful debts 748,310 1,696,676

1,343,968 1,696,676

Cash and cash equivalents

Cash and deposits are regarded as having insignificant credit risk. The balances of cash and cash equivalents were as follows:

Bank Type2015R

2014R

Nedbank Current 1,714,773 907,769Nedbank Operational 2,153,173 6,051,394Nedbank Salary savings 6,855,496 2,676,465Investec Investment 9,079,379 8,618,052Pertty cash On hand 426,963 63,645

20,229,784 18,317,325


(Restated)

(Restated)

(Restated)

(Restated)


25. CASH GENERATED FROM OPERATIONS2015

R2014

R

Surplus/ (Deficit) per statement of financial performance (5,083,986) (4,841,692)Adjustment for:Depreciation and amortisation 1,004,013 3,460,850Interest income (2,371,869) (2,373,403)Finance costs 34,724 28,661Loss on disposal of assets 8,508 179,640Fair value adjustment - financial instruments at fair value 125,085 22,404

(6,283,525) (3,523,540)

Movements in working capital 7,690,327 (3,815,425)Decrease/(Increase) in inventory 156,871 (338,050)Increase/ (Decrease) in deferred income (151,637) 151,380Movements in operating lease liability (100,061) 446,300Increase/ (Decrease) in provisions 8,114,821 (594,001)Increase/ (Decrease) in trade and other payables 477,849 (3,115,404)Decrease/(Increase) in trade and other receivables (807,516) (365,650)Cash generated from operations 1,406,802 (7,338,965)

26. CAPITAL COMMITMENTS

Development of Web Admin System 1,280,948 2,245,171Custom- made furniture - 433,696Website and intranet - 73,594Outdoor and indoor signage - 506,502Lease: High Volume Printers - 180,000

1,280,948 3,438,963

This relates to capital commitment made towards procurement of capital expenditure which is still work in progress.

27. ASSETS HELD FOR SALE

In October 2014, the Board resolved that the motor vehicle (Jetta) be disposed off in the 2015/16 financial year budget. The motor vehicle is expected to be sold within twelve months after year end and has been classified as asset held for sale

(Restated)



ActualR

BudgetR

VarianceR

Revenue from exchange transactionsLicence and certificate fees 6,197,622 2,013,500 4,184,122Service fees and penalties 30,204,907 31,263,132 (1,058,225)Interest received 2,371,869 635,304 1,736,565Other Income 1,092,708 528,135 564,573

Total revenue from exchange transaction 39,867,106 34,440,071 5,427,035

Revenue from non exchange transactionsGrant received 47,810,000 45,878,000 1,932,000

Total revenue 87,677,106 80,318,071 7,359,035

ExpenditureAdministration expenses 114,450 113,200 (1,250)Advertising 204,439 615,000 410,561Audit Fees 2,767,839 1,533,000 (1,234,839)Board 1,285,088 2,070,143 785,055Consulting fees 1,091,854 319,116 (772,738)Domestic Travel 346,454 509,084 162,630Hospitality 11,589 36,000 24,411Inspection 369,894 922,128 552,234Insurance 3,851,905 2,005,454 (1,846,451)International travel 1,694,911 1,094,548 (600,363)Inventory 780,716 1,112,004 331,288Kimberley Process 1,652 120,000 118,348Licences 548,033 143,844 (404,189)Medical expenses-retired staff 100,900 97,164 (3,736)Office lease 3,179,850 2,829,972 (349,878)Postage and courier 26,538 35,000 8,462Recruitment and selection costs 147,080 123,108 (23,972)Repairs and maintenance 717,590 540,667 (176,923)Security 794,848 780,000 (14,848)Staff remuneration 59,007,673 59,174,314 166,641Staff Welfare 114,635 166,128 51,493Subscriptions and membership fees 58,220 143,344 85,124Telecommunication 1,758,083 2,109,021 350,938Training and Development 395,946 471,788 75,842Venue and Facilities 135,497 663,992 528,495Warehousing 45,739 81,360 35,621

Total expenditure excluding non cash and abnormal expenditure 79,551,423 77,809,379 (1,742,044)

Surplus for the year before non cash and abnormal expenditure 8,125,683 2,508,692 5,616,991

BUDGET STATEMENTfor the year ended 31 March 2015


ActualR

BudgetR

VarianceR

Non cash and abnormal expenditure

Less non cash expenditure:Debtors impairment adjustment (352,708) - 352,708Depreciation and amortisation 1,004,013 - (1,004,013)Fair Value Adjustment 125,085 - (125,085)Finance charges - loans and leases 34,724 - (34,724)Leave pay provision 811,247 - (811,247)Loss on disposal of assets 8,508 - (8,508)

Total non cash expenditure 1,630,869 - (1,630,869)

Surplus for the year including non cash expenditure 6,494,814 2,508,692 3,986,122

Less abnormal expenditure:Legal fees paid 6,578,800 - (6,578,800)Legal fees provision 5,000,000 - (5,000,000)

Net deficit for the year including abnormal expenditure (5,083,986) 2,508,692 (7,592,678)

BUDGET STATEMENT (CONTINUED)

for the year ended 31 March 2015

HEAD OFFICE251 Fox Street, Johannesburg, 2001Tel: 011 223 7000 Fax: 011 334 8898

KIMBERLY OFFICE15-17 Chapel Street, 2nd Floor Chapwood Chambers, Kimberley, 8301

Tel: 053 831 3121 Fax: 053 831 3101

KWAZULU-NATAL OFFICE3rd floor, Durban Bay House, 333 Anton Lembede Street, Durban, 4000

Tel: 031 335 9677 Fax: 031 301 6950

CAPE TOWN OFFICE10th floor, Atterbury House, 9 Riebeek Street, Cape Town, 8000

Tel: 021 427 1070 Fax: 0866 124 907

www.sadpmr.co.za

ISBN 978-0-621-44051-5 • RP 332/2015